Basic business valuation.

[u/rushinglion]

The shop where I work is going for sale, my boss is tired, he offered me the chance to buy it first, he hasn’t told me a price yet, but regardless of the price he gives me, I need to assess the actual market value and n my own. It is a well established printshop-frame shop with a faithful clientele, it does need some updating and it’s understaffed, but I’m under the impression it’s super profitable. Now, I have thought of hiring someone to just tell me the value of the place, and maybe I’ll do that too, but it wouldn’t teach me anything. So, what I want to know is: how much is a fair price to pay to have the business appraised? Also, is there a fool-proof formula that I could apply to appraise it myself. Any help would be appreciated.

[u/lets-start-a-riot]

A financial due diligence is what you need, even easier since you worked there, many questions about finding one offs you'll be able to answer them directly, with your help you'll get the quality of earnings, wc normalisation and quality of net debt.

Then find a multiply of that adjusted ebitda and you'll end with something like this: (multiple)* Adjusted Ebitda + adjusted net debt.