Quote:
Originally posted by Wolf1
He is currently working with his accountant and an appraiser. I'm just curious as to how you establish a value.
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His people will give an inflated value, be careful.
FWIW
When I was approached by my friends widow to buy his business whe wanted me to pay 500K for it. It was pulling in 800K a year.
I talked to her accountant and he assured me it was worth every penny. I called an appraisal company that we were about to hire and they appraiser said the price csounded about right.
Then I went to my bank president to see about a business loan. That was the smack of reality. He asked me about 5 different times what I was getting for 500K. What it came down to was, equipment, files, client list and good faith.
He looked over what was on the table and told me to offer 25K and not a penny more. I made my offer and she countered with 125K. (500K to 125K? I think she knew she was setting me up) At that point I told her to sell to someone else I was not interested. 2 weeks later I bought it for 25K.
I am sure there is a lot more machinery, tools, etc. involved here so you need to value that. But you cannot put a value on the clients theyt are fickle and some will leave when they find the ownership has changed hands.