Putting a Price on My Business

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Mickey Miller
@mickey-miller
09/08/14 15:18:56
13 posts

I will be selling my small chocolate business, but I am unsure how to value it. I've read a lot online about selling and valuing businesses, but nothing seems similar enough to what I'm doing to serve as a good guide.

For equipment, packaging and fixtures, do I use the replacement cost? Or what I would be able to make if I had to liquidate? Seems like there should be value in coming into a business with stock and inventory in place.

Anyone been through this and have some pointers? One of my employees wants to buy the business; if that doesn't work, I have at least one other interested buyer. Right now I'm trying to get all my paperwork in order to present to a potential buyer, but obviously I also need a price.

Mickey Miller


updated by @mickey-miller: 04/09/15 05:50:39
Brasstown Chocolate
@brasstown-chocolate
09/09/14 11:04:23
14 posts

The value of your business is calculated on many factors including your balance sheet, amount of assets less depreciation and your liabilities. If most of your equipment is older and fully depreciated then you can't charge much for them. However there can be a difference between tax and book depreciation with tax usually involving some sort of accelerated method. If that is the case then use book depreciation to figure your asset values.

If you have a ready made loyal customer base then there is value in that as well. In addition there is value in future sales.

Your stock and inventory should be valued at your cost not for what they can sell for.

The bottom line is valuing a business is much like trying to find what retail price works in your market for your products. Value your business at what you think is reasonable and if that doesn't work then lower the price until you find a buyer.

Hope some of this is usable information.

Rom

Paul2
@paul2
02/21/15 12:09:44
20 posts

On a side note, I may be interested in your business, or at least your equipment of you can't find a buyer.

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