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Selling Business - How to Determine Value?

Discussion in 'Business Fundamentals' started by cold_and_tired, Jul 24, 2012.

  1. cold_and_tired

    cold_and_tired PlowSite.com Addict
    Messages: 1,246

    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?

  2. thelettuceman

    thelettuceman PlowSite.com Addict
    Messages: 1,216

    A Certified Public Accountant Is Your Friend
  3. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    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.
  4. Wilnip

    Wilnip Senior Member
    Messages: 583

    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.