the price of a business is not just the sum of the property — it is primarily the value of future profits. here are some basic tools to quickly evaluate any listing.
1. Net monthly profit
profit = Income − (Lease + Salaries + Products + Utilities + Taxes + Other Expenses)
request data from at least the last 12 months — seasonality is often important.
2. Payout term
remuneration (month) = Business price ÷ Monthly net profit
example: Price 120,000 ₾, earnings 5,000 ₾/month for → 24 months. For small businesses, 18–36 months is often considered reasonable.
3. Annual ROI
ROI = (annual net profit ÷ investment) × 100%
in the above example: 60 000 ÷ 120 000 = 50% annually.
4. Multiplier
small businesses sell frequently1.5-3 times the annual net profit price. A higher multiplier is justified if the business is growing rapidly, has a brand or long-term contracts.
5. Assets and balances
calculate the cost of equipment, merchandise, and furniture separately. Ask: Is it included in the price?
“Red Flags”
- numbers only verbally, no documents.
- income that suddenly increased before the sale.
- short term or unformed lease.
- owner who does not allow on-site surveillance.
the article is informative and does not constitute financial, tax or legal advice. Consult with a specialist before making an important decision.
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