ForumsStarting a Business

What's it Worth??

Good question. With Real Estate it is Location, Location, Location.
What do you feel the "fair price" should be??

In one of your last posts you said that you have an Accountant.
Since you are in Northern Florida you should start by asking your Accountant
and then seek help from a local real estate agent.

You are not just purchasing a business. You are also getting a building and more
How long has the business been on the market?? Hopefully you have a Lawyer.

Good luck, LUCKIEST

What's it Worth?

Thanks for all the additional info. Just remember that each piece of real estate (building) is different.
Also location plays a big role in value. If the building was in Jacksonville or Miami it would be a different
value. What does the real estate agent say is a fair offer??
You also want your offer to be lower than the asking price, BUT you have to make that decision

Again LUCKIEST

Boy a business that only gross $34k on $500,000 in sales doesn't sound that good. You want to see the books to see where all the money went. Your looking at a big monthly expense just on the cost of land and equipment unless you got alot of cash to put down. You can look on line on how to valuate a business and find a good accountant to help you on that

"The business has great potential...."

It sound like you have great ideas for the business. I suspect these ideas will cost you both time and money. You do not pay someone else for your ideas to create value.

Does the $34 M net include owner adjustments? Would you have to work in the business or is management in place?

You need to evaluate your opportunity cost; i.e. what are you giving up. I am sure you could find another job that would net you $34 M a year - and you would not have to pay $1 MM for the opportunity.

Your have a RE asset value of $415 M. How old is that? RE has been declining everywhere!

I would suggest you work with a business broker rather than or in addition to a RE agent. It seems like your primary intent is to purchase a business not real estate.

In business transactions, you need to look at BOTH price and terms. Looking at just one is not sufficient. Again, an experienced business broker could assist you in properly valuing the business and structuring a offer with terms for your situation.

Greg Dupuis

I think the price is inflated with the limited information we have. I am really worried about the profit margins. How much are you going to need to invest in marketing and advertising to see a better return?

I think a price that is $150,000 to $250,000 above the real value would be fair but not nearly double the current figure.

With all the information we have that is the best I can do. But this is just my opinion, and I am not a numbers person. Consider the source.

derek

Greg
What I did was take the appraisal values for the land and building, trippled the net revenue and added in $66,000 for the store inventory. I have gotten their returns for the past 4 years and felt $589K was a fair offer.

Rick

The triple net i had read somewhere along the way as a way to look at fair value. The inventory is good and that is the cost value of the inventory. The appraisal value was just updated last month. the building is a single stand alone structure with 2056 sq ft it sit on a lot 109 x 133. I like both the business and location and feel that it has pontential for opening multiple locations.