| How We Determine A
Selling Price For A Business Industry Standards The asking price of any Havelock-Adams client is calculated on provable numbers based on tax records and various other “hardcopy” financial documents. Ongoing research and education provides an awareness of pricing formulas and strategies that are applied industry by industry. That formula is then supplemented with an exclusive price factoring system. This system takes into consideration ten business factors, such as availability and condition of books and records. These factors may increase or decrease the result of the original base pricing formula. Discretionary Cash flow—Owner Benefit When we speak of Discretionary Cash Flow, we are referring to the amount of money that is unrelated to any expense pertaining directly to the operation of the business such as rent, employee wages, cost of goods, and other direct cost overheads. Cash flow is not profit. What is often referred to as cash flow in small businesses for sale is actually the Seller’s Discretionary Cash Flow or Owner Benefit figure. This is typically the total of net income, owner salary, perks, depreciation, interest and non recurring expenses. |
