# estimating a sales price for a business?



## djjosephm (Oct 8, 2007)

What would someone pay to buy-out a custom t-shirt website that makes around $400,000 for revenue?


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## binki (Jul 16, 2006)

*Re: Selling t-shirt website*

You should check with a business broker to find out what the going multiple is. Generally, you take your Net and multiply by a factor to get a selling price. Add to that FFE and other considerations. 

For a screen printing shop that is running perfect with no problems the multiple around here is 2.5 x Net. So for a shop that does $400K with a 35% net the price would be $400K x .35 x 2.5 + FFE or $350,000 + FFE. The multiple for your business may be different, but the calculation should be the same. You need to base your selling price on the Net, not the Gross. 

Of course everything in negotiable and there is normally a training period of a few weeks to several months with additional consulting (for a fee) that can happen over a few years. 

Good Luck.


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## TripleT (Apr 29, 2007)

There are three common ways to value a business - Income, Asset, Market. Google: Business Valuations, but also Google: Intangible Value. 

The vast majority of private business owners leave money on the table when they sell their company. A little knowledge here will go a long way to help you sell for top dollar. Good Luck


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## T-BOT (Jul 24, 2006)

djjosephm said:


> What would someone pay to buy-out a custom t-shirt website that makes around $400,000 for revenue?


how much $$$$ of that is profit?

that's what the buyer will ask you.


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## binki (Jul 16, 2006)

TripleT said:


> There are three common ways to value a business - Income, Asset, Market. Google: Business Valuations, but also Google: Intangible Value.
> 
> The vast majority of private business owners leave money on the table when they sell their company. A little knowledge here will go a long way to help you sell for top dollar. Good Luck


 
The vast majority of owners in this type of business skim money off the top, run their personal expenses through the business and wonder why they can't sell for top dollar. We looked at over 100 businesses to buy and many of them were garment decorators and they were all a mess.


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## TripleT (Apr 29, 2007)

binki said:


> The vast majority of owners in this type of business skim money off the top, run their personal expenses through the business and wonder why they can't sell for top dollar. We looked at over 100 businesses to buy and many of them were garment decorators and they were all a mess.


 
True - but even those foolish business owners should do some homework here. I should have added, Google: _Pro Forma Income Statements_ to my post. 

You're right, those owners will never get top dollar, but they should still try to sell for all they can!


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## binki (Jul 16, 2006)

TripleT said:


> ... but they should still try to sell for all they can!


Agreed


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## Comin'OutSwingin (Oct 28, 2005)

T-BOT said:


> how much $$$$ of that is profit?
> 
> that's what the buyer will ask you.


That's a big part. Revenue-to-Profit ratio.

Theres other things like debt to consider.

Too many things to even start to answer a question like that on a forum, honestly.


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