We Appraise Both Businesses and Real Estate

DEFINITION OF TERMS USED

Price 

The item listed as Price is the asking price for the business.  The price typically includes the various assets necessary to run the business.  Inventory may or may not be included--check the notes or call us.  Accounts receivable is typically not included in the Price.  Real estate, if included, is mentioned in the heading or the list.

Sales

The item listed as Sales is the latest year's annual sales or revenue reported by the Seller.  This amount is typically taken from tax returns and/or financial statements. 

Cash Flow

Cash Flow as typically defined by business brokers is the amount of money you could take out of the business without debt.  If you plan to borrow some of the money for the purchase of the business, you need to subtract the amount of the annual loan payments to make sure you have enough funds left to pay the most important person in the transaction, you!  The figure shown as Cash Flow is obtained from financial statements or tax returns beginning with net income.  To the net income figure, we typically add non cash expenses such as depreciation and/or amortization, we add interest expense paid on loans that will be paid off by the purchase, and all funds taken from the business by the owner or owners.

Assets

The item listed as Assets is the value of the "hard" assets included in the purchase.  It does not include the value of intangible assets such as goodwill.  Items typically included in the figure for Assets is the value of furniture, equipment, and fixtures, inventory (if included in the sale), and other assets included in the purchase.