The task of working out a realistic business value is a complex and sometimes very confusing process. This is why you need expert advice and guidance at this stage. Just go to your accountant for advice or ask around for a trustworthy firm.
The task of working out a realistic business value is a complex and sometimes very confusing process. This is why you need expert advice and guidance at this stage. Just go to your accountant for advice or ask around for a trustworthy firm.
But if you want to do it yourself you should find some free valuation calculators online first.
Online entrepreneur and freelance writer. For the best business finance tips go to these guys.
Try finding a business broker. Maybe do some research online for business brokers with websites that have online analysis tools you could use for something rough.
Capital Projects Enterprises | http://www.thecashflowsite.com/
I don't know what type of business you're looking to acquire, but I've been specializing in gas station financing for sixteen years and we typically go by a 2.5X gross profit as a multiplier for an approximate value (this is with real estate) We might make our multiplier higher in a nicer location and less in a less desirable location. We also use software where we can plug in numbers and come up with approximate value based on cash flow. I would imagine that this exists for most industry and business types. Good luck.
Twenty year veteran of financing businesses and commercial properties
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Depending on how big the business is, there are many avenues to attain a valuation: there are law firms that specialize and investment banks, both boutique and commercial that offer this service too. Call Quiktrak.com and ask if they can point you in the right direction. They offer a variety of business inspections and could probably point you in the right direction if your business is <$10MM in revenue/annually.
Once you get all that information (call your dentist to find out how to pull teeth as this can be tough), it's up to you to go through it and validate as much as you can. Recast the financial statements to include a "market dictated reasonable salary", as well as to add back any expenses that may appear to be "frivolous" (wages to the seller's children for an unnecessary position). After that, determine what the business is worth to YOU based upon YOUR goals and expectations.
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