subject: Determine The Fair Market Value Of Businesses For Sale [print this page] Anyone who has ever purchased or sold a house knows that a finance institution or bank will do valuation on the property to establish a fair market value. Sellers of property will often get a comparative market appraisal from their real estate agent to get a fair price in the market.
However, when it comes to buying businesses for sale it is not usually the case. So how will you determine the fair market value of the businesses for sale?
There are just two things you need to keep in mind.
First, you must value businesses for sale given certain assumptions and considerations. Second, you have to look at the bready band willing market value or price at which the businesses for sale could be expected to be bought and sold.
The major part of determining the total value of businesses for sale is often the goodwill and it must be capable of being transferred. Without the reasonable probability of the earnings of future maintainable profits, no present value in the form of goodwill can reasonably exist.
It has been said that market value is that price at which the businesses for sale is most likely to change ownership at an arms length transaction between buyer and seller, neither under a particular compulsion to act.
Today, as a business purchaser, do not make decisions based on emotional reasons. Calculate the value of businesses for sale based on sound profitability; the sustainability of the reported earnings and the Return on Investment (R.O.I.) which can be categorized according to the following risk:
•15-25% R.O.I. for a low risk business
•30-35% R.O.I. for a medium risk business
•50-100% R.O.I. for a high risk business
If you are ready to buy businesses for sale, visit http://www.bizsellbuy.com.au/ for more information.
by: Nigel
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