How does one determine value of buying a sausage shop? hard assets + stock + a % of annual sales for 1 year??? etc etc etc. Or does owners annual take home become part of the equation. What about determining value of used equipment? I will try to post pics when we have them to ask for your help once again on that part of the value determining process.
Consult with a realtor who does commercial Real Estate. There is a lot to determining what a business is worth and some of that is what is actually being sold
Do not do this without a professional by your side
__________________
Joe Parajecki
Operations Manager/ Partner
Kettle Range Meat Company, Milwaukee WI
Member Meat Cutter Hall of Fame and The Butcher's Guild
Once again I agree with Joe. Get a professional on your side. It may cost a bit, but I am guessing a lot of that can be billed to the seller of the business but what you may have to pay would be well worth it. No sense in overpaying for a business, that may even set you up for failure.
__________________
I'm not a vegetarian, but have eaten many animals that were.
thank you to each responder of my posts. It turns out the owner of said shop has accepted an offer to sell building only & collapse the sausage side altogether. Again thank you for your helps!! I will delete myself from the group here in the next day or 2 - if I can do that by myself. (might need an admin help with that issue.... My son will go back to the full plant he has been working at for 4.5 years.... not excited about the atmosphere of employees there but my opinions dont count much as a Dad.
Much of the value of a business is not to be found in its hard assets such as the fixtures and equipment, but in the intangibles that create the income. Such as; reputation, brand name recognition, sausage recipes, customer list, vendor list, domain name if applicable.
A simple way to describe goodwill is the difference between the current market value of the tangible assets (hard assets such as equipment and building) of the business and the total value of the business.
Equipment, real estate and inventory are rather easy to calculate. Its the total value of a business that is difficult. In my opinion "total value of a business is determined by available cash flow and the risks associated with obtaining it. Sure there are other factors too such as product, service, market and growth. But how buyers judge and ultimately gain prospective on those aspects of the business is how much cash flow it generates. The very first step is to determine what the sellers earnings are. This can be a base number to calculate what the goodwill is worth if it is a part of the intangible assets in the sale price.
