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Old 02-17-2013, 05:42 PM
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aswinter05 aswinter05 is offline
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Jersey Dave, I'm a CPA near Indianapolis Indiana.

Valuing a business varies depending on the industry, however, there are definitely a couple of basics to consider when assigning a "price".

In my specific industry, Tax & Accounting businesses are typically valued at GROSS INCOME for 1 year. (plus some other costs which I will explain)

With any business and any industry, there's always a "goodwill" factor that plays into the cost. Think of goodwill as a premium on the purchase price which depends upon: Reputation, Name, Internal Processes, etc.

For instance, a business that has existed for 30 years versus a business that begin a year ago will cost more to purchase even if both of those businesses have identical annual profits.

I Hope this helps a little bit. FYI, there is an actual designation and/or license that some individuals obtain to perform official "business valuations". I'm pretty sure they are just referred to as Business Valuation Experts. I would recommend ANYONE selling an established business to hire one of these experts. Sure it may cost some money to hire this person, but think about what's at stake.
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