| Best thing I ever did 10 years ago, now got a business with a very good turnover and great margins with low costs and I only work 3 days a week.
If you are thinking of buying a business get your accountant to look at the last 3 years accounts to see what profit is being made, how sales are going ( up or down), margins being made, how many years left on property lease / rent and what is the stock worth in the real world. You could find the stock is valued in his books at £20,000 but only worth 1/2 of that. Is the price being asked for the business realistic to profit being made. As a rule of thumb never pay more than 2 1/2 times EBIT. ( Earnings before interest and tax ) Most important of all, what cash flow will you require to run the business in the first 12 months.
Also try and find out why he is selling. |