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Business Settings

Get the Details Right

Discover Assessment and Details about the Business 

The first page in the Discover Assessment begins by asking some questions about the business. These details are necessary to help us figure out who to best compare your business. These items also help us filter your business into a category for better results.

The Details

This is one of the first pages you come to in the Discover Assessment. These are the metrics our algorithm needs in order to calculate the enterprise value of the business as well as the other valuable numbers found in the report. Use the drop down below to help learn more about some of these specific categories.

Business Setting Stardard

 

Type of Entity

Choose one of these from the dropdown.

Here are some different types of business entities:
  • S-Corporation
    A corporation where shareholders have elected to have their corporation taxed under Subchapter S of the Internal Revenue Code
  • Sole Proprietorship
    An unincorporated business with one owner, where the owner and business are not separate entities
  • Partnership
    An incorporated business where shareholders are separate entities, but at least one general partner has unlimited liability for the business
  • Limited liability company (LLC)
    A separate legal entity where owners, called members, have limited liability to their contribution to the business
  • C-Corporation
    A separate legal entity from its members, formed and regulated under specific laws
Industry Sector

At ValuCompass, we use the "Sector Title" to classify all businesses within the 22 NAICS Industry Codes.

What is a NAICS Code?

A NAICS (pronounced "NAKES") Code is a classification within the North American Industry Classification System. The NAICS System was developed for use by Federal Statistical Agencies for the collection, analysis and publication of statistical data related to the US Economy.

It was adopted in 1997 to replace the Standard Industrial Classification (SIC) system in cooperation with the statistical agencies of Canada and Mexico. Their goal was to establish a North American standard.

NAICS is a two-through-six-digit hierarchical classification code system, offering five levels of detail. Each digit in the code is part of a series of progressively narrower categories, and the more digits in the code signify greater classification detail. The first two digits designate the economic sector, the third digit designates the subsector, the fourth digit designates the industry group, the fifth digit designates the NAICS industry, and the sixth digit designates the national industry.

How do I use them?

Either the business owner will know their six-digit NAICS code or they will know the Industry Title. Use this chart to cross reference the number and the title.

NAICS Code list 1

 

Use the NAICS website to learn more:

https://www.naics.com/

 

Revenue

Revenue is the money generated from normal business operations, calculated as the average sales price times the number of units sold. It is the top line (or gross income) figure.

EBITDA

EBITDA is short for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is one of the most widely used measures of a company's financial health and ability to generate cash.

EBITDA does not include the owner's compensation.

EBITDA removes the impact of income taxes. The idea is that this makes firms easier to compare since two companies may have differing tax rates due to legal structure, accounting practices, or unnecessary expenditures.