Anonymous
Anonymous asked in Business & FinanceOther - Business & Finance · 1 decade ago

What does the selling price of a business account for?

When someone buys an existing business, say its a small business. What would the selling price account for?

My assumption would be the land and building value, in addition to 1 to 5 years of the businesses average yearly income.

2 Answers

Relevance
  • 1 decade ago
    Favorite Answer

    And what if the business does not own the land and building and are just renting? Usually you buy the assets ( equipment, supplies, inventory) and 2 to 2.5 times annual profit. You are paying also for goodwill, and make sure to see that you can take over the lease and not have to move immediately.

  • donges
    Lv 4
    4 years ago

    this may well be a question of Accounting section 2. AKA - A2. If u have a e book named Accounting third version with the aid of H Randall, seek for suggestion from it somewhat than web pages. It supplies u lots extra clean potential. desire this helps!

Still have questions? Get your answers by asking now.