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torin
Apprentice
Joined: 22 Oct 2005
Posts: 17
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 Posted: 09/22/07 - 05:06 Post subject: |
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| I have been offered to take over a small business as a going concern. It does interest me and I have some cash available. After doing a number of checks and verifications I want to go ahead. But the difficulty is of course to value the business and agree on compensation. What are your views on this? |
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rockey
Apprentice
Joined: 12 Oct 2004
Posts: 18
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| Posted: 10/07/07 - 23:48 Post subject: |
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| How long is a piece of string? You will probably find as many ways of valuing business as there are species of butterflies! Fortunately, there is a degree of convergence of thoughts - especially for small businesses. The valuation of the stocks is fairly straight forward, as is that of fixed and movable assets after depreciation. The only less objective area is the business potential of the company, its established reputation, the value of its debtors. Most commonly one will use last year's IBITDA (Income before Interest, Taxes Depreciation and Amortisation) and negotiate a multiplier to it. |
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fred333
Apprentice
Joined: 31 Dec 2007
Posts: 20
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| Posted: 01/02/08 - 14:47 Post subject: |
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| I think you would have to look at the potential of the business rather then the current assets of the business. That would be a great way to value a business. |
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