Understanding owner compensation is an essential piece of both an accurate business valuation and a holistic financial plan, yet it often takes complex calculations to render an accurate view.
Now, however, there is a solution.
Introducing the New Owner/Officer Compensation Worksheet
With BizEquity’s newly developed Owner/Officer Compensation Worksheet, we are working to help ensure you add the correct data needed for accurate results—and do so easily. The new Worksheet will give you the tools to easily handle owners compensation and related scenarios as they impact the calculation of "Seller's Discretionary Earnings" (SDE). Common adjustments revolve around multiple partners, part-time owners, related parties such as family members on the payroll, and more.
Why Did BizEquity Build this New Worksheet?
A key element of any business valuation is the Seller’s Discretionary Earning (SDE) as this calculation provides the broadest pertinent insights into a company’ ability to generate cash flow on behalf of the owner and, perhaps most importantly, helps to properly value a business by addressing many of the most pertinent questions. Because of this, the SDE of a business is a key factor in the proprietary Bizequity valuation algorithm.
Owner’s Compensation, meanwhile, is often the single most important consideration in generating a credible and accurate estimate of a company’s SDE and therefore, of a reliable estimate of business value. By creating an easy-to-use worksheet that determines an accurate estimate of an Owner’s Compensation, we are helping advisors and their small business owner clients arrive at an even more accurate estimate of a business’ value and do so efficiently.
Where Is the Owner/Officer Compensation Worksheet Located in the App?
The Owner/Officer Compensation Worksheet is a separate module which can be accessed both within the existing seven-step valuation process or independently as a standalone experience.
Within the seven steps, the Worksheet can be found once you begin to fill out Step 3.
On its own, you can access the Worksheet here: bizequity.com/officer-compensation/worksheet.
See below for a look at the experience.
How Does the Worksheet Function?
The Owner/Officer Compensation Worksheet is a guided, eight-step process designed to ensure users correctly add their information.
The goal is to ensure that the Owner/Officer compensation entry into the Bizequity algorithm is as accurate as possible by way of eight focused questions which lead the users toward a final figure that supports a credible estimate of business value.
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Now you have the tools to easily handle owners compensation and scenarios when there are multiple partners by helping to identify and account for common adjustments such as multiple partners, part-time owners, family members on the payroll, and more. Login to your BizEquity platform and get started today.
