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Old 11-27-2012, 12:24 PM   #69
Saul Good Saul Good is offline
Quit your bullshit
 

Join Date: Jul 2005
Location: Bored of winning
Casino cash: $52899
Quote:
Originally Posted by Phobia View Post
A business is worth roughly twice its annual profit. If the profit is $30k, by all means give them $15k. Otherwise, they made a bad investment and they should learn from it. They're the ones moving. If they want to stay and work the business into profitability then they should do that. Otherwise they should spend $300 on a community college business course.
The two times profit rule is a decent starting point, but it is FAR from a hard and fast rule. Even then, it is important to include the value of hard assets, subtract out debt, etc.

It may not be applicable at all in circumstances where the owner is so tied to the business that the profits will be disproportionately impacted by the transfer of ownership. For example, some chick can have an adult web site where she sells memberships to watch her do porn shows. I can buy her site for 2x profit, but I'm not going to be able to replicate those profits on my own because she was the product, and the business was little more than a vehicle to deliver the product to the customer.
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