I want to sell my business. How do i figure out an asking price?

I want to sell my business. How do i figure out an asking price?

I own a fitness club (Curves) and want to sell it. I rent the building so all I am selling is the business and the equipment. Is there any kind of formula based on gross sales or net sales that I can use to decide on an asking price?

EJ

There certainly is a formula based on gross sales and adjusted net income and for a Curves franchise it is not likely what you would hope it to be. A highly capitalized business, or a business with significant barriers to entry would command a price between 3 and 5 times adjusted net income- however, a Curves franchise has such low barriers to entry it will typically trades at about 2/3rd of annual revenue and a bit over 1-1/2 times adjusted net income. These are historical averages and there are many, many factors that will impact price. Contact a professional business broker in your community or myself for a more detailed pricing analysis.Note: Adjusted net income is net income with interest, taxes, depreciation, amortization and personal (non-business) expenses, e.g., health insurance, auto, etc. added back to the bottom line.Source(s):http://www.buysellflbiz.com/

Binky

Functioning businesses typically "retail" for roughly three years net PROFITS (not sales!), assuming they achieve an average ROI for their industry...Think about it, "buying a business" is not different than making any other investment, so the potential return is dependent on the inherent risk....if T-Bonds can yield 2% at close to zero risk, and a Stock portfolio can yield 8-10% with minimal risk and NO active participation, then to buy an operating business outright, the potential return must be FAR higher (thus the 33% expectation, returning 100% of the equity at risk within three years)...Bear in mind any prospective buyer can buy a NEW Curves franchise for about $28,000, and that whilst having "used" equipment reduces the value, if you have an established customer base that enhances it...Get out your books & do the numbers!Good luck!Source(s):http://www.buycurves.com/pricing/

Linus

I sold my Liquor/Wine outlet many years ago, and the accepted mark-up on that business was between 2 1/2 to 3 x Annual Net Profit.

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