How do I determine the purchase price/worth of an established business (auto detailing) I wish to buy?
Determining the purchase price of a business is more of an art than a science. Of course, you can go off what their annual profit is and figure out how long you want to take to recoup your initial investment, but that assumes that your profit stays constant, and, without knowing what’s going on inside the company, it’s almost impossible to predict profits three or four years from the present. The safer bet is to contact a reputable business appraiser to examine the company’s historical finances and compute its actual fair-market value based on its present condition.
