Selling Business - How to Determine Value?

[cold_and_tired]

After accidentally getting into the snow removal business and growing it to be our areas largest, I have been offered a job offer elsewhere with a great salary and full benefits. With a kid on the way, I need to take the smart route on this one.

Anyway, I want to put my business up for sale and have a couple perspective buyers in line. What I need advise with is figuring what the sale price should be.

I have about $8k in relatively new (only one season) equipment and a few other pieces that have 5 or 6 seasons on them.

I have two seasonal contracts with two years left on them. Each pays about $14k per season. In addition to the seasonals, I have six per push and hourly contracts that have a five year average of $11k each.

I have also included two seasons worth of consulting for the buyer. The business is also debt free.

To recap:
$9,500 worth of equipment
$94,000 per season of potential income with $28k guaranteed
Two years of consulting
Debt free business

Since no customer is ever guaranteed, I really have to eliminate the fact that there is any potential income. Therefore, I am really down to the price of the equipment and my consulting time.

In my mind, the negotiations should start at $12,500. Am I close? Way over? Under?

Opinions?

[thelettuceman]

A Certified Public Accountant Is Your Friend

[RLM]

My question would be is it a dba or Corp, to me that is a big question. My clients, contract with my business, not me personally, if I sold the corporation they still have a contract with the corporation. Maybe it is tge wrong attitude, but it would be know different if I hired an account manager and turn their propety over to him to take care of.

[Wilnip]

I think you are in the ball park. Most "normal" businesses are valued by applying a multiplier (between 1 and 5) to the yearly profits' after you are paid a fair wage.