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Business Vaulue

  • 17-12-2017 8:45am
    #1
    Closed Accounts Posts: 42


    I've just been offered a business for sale. I'm just wondering is there a formula for vauluing a business?
    he is looking for a multiple of the turnover, I'd be more comfortable with a multiple of the profit?
    I know commercial property is a very simple formula. 10 times the rent plus a bit.
    I once sold a business and I got 4 times the profit but it wasn't very profitable, but this business is well established and profitable.
    I want to have some clue before I meet him next week.

    thanks


Comments

  • Registered Users, Registered Users 2 Posts: 224 ✭✭sysprogrammer


    pay a few hundred to get professional help , you make your money(savings) when you buy.

    Turnover is vanity, profit is sanity ,so stick to a value that is affordable.

    lastly, and nothing personal , but why are they offering it to you ?
    has it been hawked around their industry already, and no existing operator wants to touch it ?

    rgds,
    Sysprog


  • Closed Accounts Posts: 6,926 ✭✭✭davo10


    Get a professional to check EBITDA, the purchase price for a business is usually a multiple of this.


  • Registered Users, Registered Users 2 Posts: 224 ✭✭sysprogrammer


    don't check EBITDA , and certainly don;t use the word Multiple, I tried to avoid it as the business may not be even worth 10c

    What I am trying to get at is that the business may not be worth anywhere close to 100% , never mind a multiple.

    Seek professional advice and then low-ball.

    for the 2nd time today : You make your money when you buy

    hth,
    Sys


  • Posts: 18,962 ✭✭✭✭ [Deleted User]


    other considerations - if they have one or two big customers that account for a big % of the business that potentially makes it riskier as if that's lost the business impact is large.


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