Evaluating a Business
A business's worth, is that price at which it will support
it's structured debt service and pay a fair salary to the owner
along with a fair return on the owner's investment.
- MARKET COMPARISON
- Divide sale price by total sales (any average). Weight it-
what's more important? Net profit should be at least 2/3 of decision.
- Net profit- minus manager's salary divided by cap rate. (20-35%)
- Value of stock and fixtures plus 1 years net profit.
- Value of stock and fixtures at bargain/wholesale liquidators
price. Replacement value of equipment, less depreciation.
- Business Buyer Resource Center - "Learn 100s of tips, strategies
and techniques to help you find and buy the right business".