The Three Ways to Appraise a Business
1. The ASSET VALUATION METHOD.
This method is basically used when a body shop does less than $400,000 a year in gross income and the seller is making wages, but no real profit above what he would be paid if working for another. On this size business, a buyer is willing to pay for the assets of the business but little or nothing for goodwill. The equipment is usually worth between $50,000 and $100,000, depending on how many frame machines the business owns and how nice a spray booth the business owns.
I have seen some specialized shops sell for more than the above number because they have a truck spray booth or another business attached to the main business. Examples of attached business might be an auto repair shop or towing operation. Also the location, size and real estate rental amount will influence the value of any business, to some degree.
2. The second method, I call the GROSS SALES METHOD.
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When Making a Business Acquisition, Whom Can You Trust?
/in Articles, Business Buying, Business Buying Troubleshooting, Due Diligence/by Willard MichlinWhen a business broker tries to play both sides of the buying and selling process, it can mean trouble for the buyer, seller, or both. Don’t get had by a “dual agent” broker.
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Do It Yourself Business Due Diligence
/in Articles, Business Buying/by Willard MichlinOkay, you’ve made the decision to buy a business.
Okay, you’ve made the decision to buy a business. You have a lender lined up; an attorney is on the ready line and your CPA is standing by; now you just have to complete the due diligence work. It would be convenient to have either your CPA firm; or law firm perform the due diligence work; however, they have quoted hourly rates at $250/hour (or more) with no cap on the number of hours it might require to complete the work. Who knows what the total bill could be…$8,000…$10,000…$12,000?
So you decide the most cost effective approach is to perform the due diligence yourself.
There is just one problem. You’ve never performed due diligence before and questions keep rolling around in your head. “Where do I begin? What information do I ask the Seller to provide? What am I looking for? How do I interpret the information provided by the Seller?” Read more
Crime Does Pay When Buyers Don’t Do Due Diligence
/in Business Buying, Business Due Diligence Horror Stories, Due Diligence/by Willard MichlinDon’t let your business purchase lead you into becoming the victim of white-collar crimes. Find out more from our business buying experts.
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Business Buying Advice: Do You Want to Buy the Seller’s Corporation?
/in Business Buying/by Willard MichlinBusiness Buying Services tells you everything you need to know about whether or not you should buy a corporation.
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How to Appraise an Auto Body Shop
/in Articles, Specialties/by Willard MichlinThe Three Ways to Appraise a Business
1. The ASSET VALUATION METHOD.
This method is basically used when a body shop does less than $400,000 a year in gross income and the seller is making wages, but no real profit above what he would be paid if working for another. On this size business, a buyer is willing to pay for the assets of the business but little or nothing for goodwill. The equipment is usually worth between $50,000 and $100,000, depending on how many frame machines the business owns and how nice a spray booth the business owns.
I have seen some specialized shops sell for more than the above number because they have a truck spray booth or another business attached to the main business. Examples of attached business might be an auto repair shop or towing operation. Also the location, size and real estate rental amount will influence the value of any business, to some degree.
2. The second method, I call the GROSS SALES METHOD.
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Marketing Your Restaurant for Success
/in Articles, Specialties/by Willard MichlinExpert strategies and tips for marketing your restaurant, franchise, or fast food joint.
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Misrepresenting a business for sale is it a crime?
/in Business Buying/by Willard MichlinCrime Does Pay When Buyer’s Don’t Do Due Diligence
Since I became a CFE (Certified Fraud Examiner) and started going to National conventions, I have been finding out some very interesting facts about white collar crimes.
White Collar Crime’s Financial Cost 15x Higher than Violent Crime
Violent crimes, including theft, armed robbery, and murder cost the legal and prison system about $20 billion per year. White collar crimes cost a total of $300 billion per year. That is 15 times larger than violent crimes yet we hear little about white-collar crime. Read more
Trouble Shooting Your Business Buying
/in Business Buying Troubleshooting/by Willard MichlinBeing able to trouble shoot a problem is an art that must be developed.
Though there are those who think they are naturally good at it. There are a very small number of business schools that actually train you in the art of doing this, I only know of one. Read more
What You Need to Know to Value an Auto Body Shop
/in Business Buying, Business Valuation TIps/by Willard MichlinWe have developed a comprehensive questionnaire in order to help you determine the value of an auto body shop before purchasing it.
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Due Diligence Analysis: The Iron Works Story
/in Business Buying, Consultants, Due Diligence/by Willard MichlinHow much error can a buyer expect from a seller’s financial reports? A due diligence investigation will help you discover all you need to know.
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