I am in the process of buying back shares my consulting firm from my partner and am searching for information on how to value a closely held services firm. Any advice?

Question

I am in the process of buying back shares my consulting firm from my partner and am searching for information on how to value a closely held services firm.  Any advice?

anonymous · Answer

This is an excellent book on the topic. 

Valuing Small Businesses and Professional Practices (McGraw-Hill Library of Investment and Finance) - Hardcover (Mar. 1, 1998) by Shannon Pratt, Jr., Robert Reilly and Robert Schweihs

I recommend that you contact a business appraiser, however. The appraisal of a closely held business is complicated. To ensure that you pay a fair price, you may need the services of an expert. I appraise closely held businesses for a living. If you have more detail questions ask. If you need an expert please feel free to contact me.

anonymous · Answer

Great I will take a look at the book... We are at an impasse because she wants to set the sale of her shares on a value based on prior 2-3 years EBITDA and I want to value based on future net cash flows.  As a general rule, I was curious about generally accepted practices.

anonymous · Answer

I propose you to evaluate the business based on cash-flow starting from EBITDA.