Industry Selection
The correct NAICS code Industry selection determines which Normalized Trading Range (NTR) the company will be compared with as well as if the Potential Enterprise Value will be determined by profit or EBITDA. It also sets up the “How Does Your Business Compare?” section of the Report relative to Industry Peers. If you select the incorrect Industry, the Report will be off.
Where do the Industry Titles come from?
For more information about the NAICS Code classifications, visit the NAICS Code Website.
The Industry Categories that ValuCompass uses come directly from the official 22 Industry Titles of the NAICS Codes. Once you know the first two digits of the code you can cross reference it here and then use the dropdown menu in the assessment:
It is very necessary to get the Industry Code correct because it will certainly influence the outcomes of the report. A quick Google search of your business can often yield positive results regarding the Industry Code. We also recommend using the business owners tax return to find this information if possible.
Why not use the actual number?
We don't use the full six digit NAICS code because it's too granular and more specific than we need. We use to include the first two numbers in the assessment but some people found this confusing. At the same time, many business owners do not know their full six digit code and prefer the board sector titles.
For more help on NAICS Code, watch the following video: