Businness Sale Price

[Melville]

I was wondering on how to price a towing business to sell it. Well established turn key light duty service only, towing only no  sidelines. I know to take into consideration property values and debts and assets, I was wondering if there is a formula to help. any info or ideas will be appreciated.

[Bushwacker]

I would take annual X 10 + equipment and property value.  That should put you in the ballpark 

[doingitall]

Strongly disagree with Bushwacker. Even business brokers will only do 5X profit, not total income, actual verifiable profit. More info is needed though ... do you actively manage the business, and are you also the lead employee/boss/owner? How many employees? How long in business? Do you have actual contracts with law enforcement or shops? Most businesses where the owner is also the manager, lead employee, chief bottlewasher and bathroom cleaner have very little value beyond the value of the actual property and hard assets. Without contracts in writing that actually include clauses that allow continuation through change of ownership (motor club contracts actually exclude continuation through change of ownership), any value to continued relationships (because that is what they are, ongoing relationships) simply goes away when the owner and potentially key employees go away through change of ownership. If you have a long standing business with a great long term (decades long) reputation that has already transcended ownership and employee changes, then you may have something of value beyond the value of trucks and equipment at auction prices, and the value of land and a building. Otherwise there is simply not much value beyond those hard assets. No one is going to buy your debt.

 

Edited February 11, 2021 by doingitall

[Melville]

Differing opinions aside, I too assume 10x annual is a little extreme to dream , but I also disagree that a well established business is only worth the sum of its parts. I was approached by a potential buyer, I was not actively pursuing a sale. My question remains, how does one put a price on it?