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Thread: Buying a Business

  1. #1
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    Buying a Business

    Does anyone have experience with buying businesses?

    If so how do you estimate the purchase value of the business, is there some sort of formula that you would use to estimate this?

    Thanks.

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    Quote Originally Posted by Mean Bro Green
    Does anyone have experience with buying businesses?

    If so how do you estimate the purchase value of the business, is there some sort of formula that you would use to estimate this?

    Thanks.
    Net present value of the future estimated cash flows. If it is positive, it is likely a good investment.

    NPV= - investment + present value of future cash flows

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    Quote Originally Posted by Mean Bro Green
    Does anyone have experience with buying businesses?

    If so how do you estimate the purchase value of the business, is there some sort of formula that you would use to estimate this?

    Thanks.

    I just bought a business a few months ago. Number one thing you need is an accountant firm to go over the company's books. Its expensive, because they charge by the hour, but they trace the company's last few years and will hep you determine if the company is making as much as they say they are, and if the purchase price is a price that is realistic. They will determine what the net income of the business really is.

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    Quote Originally Posted by mdav 28
    I just bought a business a few months ago. Number one thing you need is an accountant firm to go over the company's books. Its expensive, because they charge by the hour, but they trace the company's last few years and will hep you determine if the company is making as much as they say they are, and if the purchase price is a price that is realistic. They will determine what the net income of the business really is.
    I'm dealing with a business broker, is this something they do and will provide or is it best to do your own, I could imagine having to pay for this service for several businesses until you find the right one could be pretty expensive

    Are these brokers to be trusted anyway?

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    Hey man there is no set formula. It varies from industry to industry because of account receivables and their variances as well as is it a simple mom and pop enterprise or is it a stock purchase whereby you will need an Asset Purchase Agreement, delineating vendors, client lists, databases, web presence,proprietary objects, forms and pictures used in running the concern, etc.

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    Quote Originally Posted by Mean Bro Green
    I'm dealing with a business broker, is this something they do and will provide or is it best to do your own, I could imagine having to pay for this service for several businesses until you find the right one could be pretty expensive

    Are these brokers to be trusted anyway?

    The Business Broker really doesnt do much from my experience. Basically i searched through all the listings and told him what i wanted to look into. I didnt hire the accountant firm until we got into contract with the company we purchased. We used them during the due diligence process. Unfortunately, you cant get a lot of info. until you go into contract. But make sure before you hire an accountant you really are interested in the company and the kind of business it is.

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    Quote Originally Posted by Mean Bro Green
    I'm dealing with a business broker, is this something they do and will provide or is it best to do your own, I could imagine having to pay for this service for several businesses until you find the right one could be pretty expensive

    Are these brokers to be trusted anyway?
    It wouldn't happen to be a bar.

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    Quote Originally Posted by mdav 28
    The Business Broker really doesnt do much from my experience. Basically i searched through all the listings and told him what i wanted to look into. I didnt hire the accountant firm until we got into contract with the company we purchased. We used them during the due diligence process. Unfortunately, you cant get a lot of info. until you go into contract. But make sure before you hire an accountant you really are interested in the company and the kind of business it is.

    I got some forms that show the annual sales, adjusted net, and gross profit with the statement that owner will prove all numbers, I visited the sites and checked them out too, obviously its money well spent to do your due diligence but I dont have alot of coin to spread

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    Quote Originally Posted by New York Mick
    It doesn't happen to be a bar does it?
    if it were, i'd get you to recruit and run it for me

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    Quote Originally Posted by Mean Bro Green
    I'm dealing with a business broker,
    Mean Bro, what's the going price for porn sites these days?

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    Quote Originally Posted by PatsFanTX
    Mean Bro, what's the going price for porn sites these days?
    Straight, Gay or Tranny??

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    Quote Originally Posted by Mean Bro Green
    if it were, i'd get you to recruit and run it for me
    I'm trying to get a bar and it's a pain in the ass. We just hired a lawyer and an accountant last time and it made it real easy as far as whether it's worth it or not is hard to tell. You can't really go by past numbers because the place could have been ran wrong so I just go by whether or not I think I can make a place work from the locations.

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    Quote Originally Posted by Mean Bro Green
    Straight, Gay or Tranny??
    Midgets

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    Quote Originally Posted by Mean Bro Green
    Does anyone have experience with buying businesses?

    If so how do you estimate the purchase value of the business, is there some sort of formula that you would use to estimate this?

    Thanks.

    Why does the image of the two guys from "Grounded for Life" come to mind?

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    1. Know the industry.
    2. Do the appropriate due diligence.
    3. Do a SWOT analysis and risk plan.
    4. Calculate NPV as well as time to break-even. It's all about cash flow.

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    Quote Originally Posted by New York Mick
    I'm trying to get a bar and it's a pain in the ass. We just hired a lawyer and an accountant last time and it made it real easy as far as whether it's worth it or not is hard to tell. You can't really go by past numbers because the place could have been ran wrong so I just go by whether or not I think I can make a place work from the locations.

    where are you looking?

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    Also, what will the owner be doing after he sells to you? Starting up a competitor??? You need to protect against competition and those kinds of things. Get a non-compete agreement in place as part of the transaction.

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    Quote Originally Posted by jetstream23
    Also, what will the owner be doing after he sells to you? Starting up a competitor??? You need to protect against competition and those kinds of things. Get a non-compete agreement in place as part of the transaction.
    competition is not a factor in this business but tehre is a ten mile ten year NCC attached

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    Quote Originally Posted by Mean Bro Green
    where are you looking?
    Broward

    I have two different people that want me to open a bar with them but they want something they can't get for the money they have. I have one other place that I'm waiting to talk to the owners about on the border of Pompano and Ft Lauderdale. If I had the money I would have already had a place dealing with investors is a huge pain in the ass.

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    Quote Originally Posted by New York Mick
    Broward

    I have two different people that want me to open a bar with them but they want something they can't get for the money they have. I have one other place that I'm waiting to talk to the owners about on the border of Pompano and Ft Lauderdale. If I had the money I would have already had a place dealing with investors is a huge pain in the ass.
    I'm looking through transworld which is supposed to be one of the bigger brokerages

    www.tworld.com

    I just drove through pompano the other day, kinda crappy in parts no?

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