what is included in the selling price of a business?

In Selling Property - Asked by michelle b. - May 29, 2012
Report Abuse
Answer this Question

Answer(s)

Steve H.
Broker/Agent
Fort Lauderdale, FL

Depends on the type of business, but basically broken down into three parts.
1). Goodwill- this is the intangible value and is the trickiest to put a value on; Could be a multiple of earnings or just a flat value( the value of the franchise, the customer list, the ongoing reputation of the business, barrier to entry?) Better put, what is it worth to get into the existing business versus starting up on your own?
2). Fixed assets- what is the value of the physical assets used in the operation of the business?; Could be net book value( cost less depreciation) or appraised value( or just agreed upon value)
3). Real estate- what is the equity in the property if owned or the value of the leasehold improvements if leased?
Hope this helps. Good Luck on your sale!

May 30, 2012
Report Abuse
Betty S.
Broker/Agent
Deer Park, TX

Inventory and or equipment

May 30, 2012
Report Abuse
Rick T.
Broker/Agent
Pompano Beach, FL

Whatever is agreed upon. That may be goodwill, real estate, fixed assets, leases, personal property inventory, accounts receivable or payable, telephone numbers, outstanding discount coupons, website domains, etc. it should all be in agreements and/or schedules so that the buyer and seller are both on the same page.

Jun 1, 2012
Report Abuse
Chris R.
Broker/Agent
Denton, TX

Assume nothing - ask specifically what is included in the offer for the price quoted. A price quoted may be for this and that but NOT the other. The other may be available for an extra price. Some FF&E (Furniture, fixtures, equipment) may be available for extra. Some FF&E could be under lease and you would be expected to assume the lease payments. Make sure of what is being offered. IF FF&E is included - then an inventory of such should be readily provided. Compare the inventory offered with what is there and you might find some things not on the list. All gets down to what is in the offering.... may also include a lease obligation. Inquire and know the details up front.

Jun 1, 2012
Report Abuse
Victor B.
Broker/Agent
Rancho Cucamonga, CA

Typically it is Business Good will and the cash flow it generates, fixed assets, lease agreement rights (or Real Property if part of the deal) and any assets the business may have (websites, intelectual property, whatever gives the business an edge). 2 week training from seller. Inventory is additional unless specifically included in the offer and accepted by seller. However, all these items need to be specifically included in the offer and accepted by seller. The only assumption you want to make is that everything is negotiable. Otherwise assume nothing as ultimately what is in writing is what counts. The key is in the writing of the offer. Also, make sure you ask for enough time for due dilligence (typically 2 weeks).

Jun 4, 2012
Report Abuse
Kristina H.
Broker/Agent
Austin, TX

Biz Buy Sell does a fantastic job of assisting you with putting a value on a Business. There is a formula on the website. I have listed a couple of business's there. Also, there is a class in Dallas and Houston June 27th on Buying and Selling Business's Start to Finish. 9 Credit Hours MCE.
It is a TREC Course through RettSchool.com. Contact 281-744-0219.

Jun 8, 2012
Report Abuse
Chris S.
Broker/Agent
Coeur D'alene, ID

Any real estate +
Inventory at 10 cents on the dollar (wholesale)
Going concern based on 1-4 times the net, net, net income (net of owner's salary too!)
Goodwill is pretty much worthless in the current economy
Unless you are selling a publically traded company, then it's a different formula.

Aug 1, 2012
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question