Question:
The business is national in scope. No storefront. Lots of travel. Patents involved. Etc. Need to know if there are any good trade journals that people looking to buy a business refer to. Are there any great, free resources on the web to help me prepare for the sale? Is there anything you would suggest? Books you'd recommend? All input welcomed. Thanks.
Answer:
RULE OF THUMB: Take average net annual profit (substantiated by 3 years of tax returns) divided by 30% (.30 = risk factor estimate for most service business). E.g. Your average profit is $10,000, then 10,000/.30 = $33,333 Sales Price.
NOTE: In some service businesses there are other things to consider such as supplies, equipment, etc. so take that into consideration (less depreciation of course) in your asking price.
This is a "Rule of Thumb", but if your business has less risk, you could ask a higher price. For example, in many low risk businesses the asking price is 5 times average annual profit.
Good luck.
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