Leno Needs Help 3 - how to value a business ? (0 viewing)
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Leno Needs Help 3 - how to value a business ?
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leno21 (User)
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Last Edit: 2008/01/12 02:52 By leno21.
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1 Year ago
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I would be interested in Business A or B depending on the valuation.
I prefer higher income generation, lower inventory turnover. NTA is not much of relevance to me.
Hence, if given all 3 business at same valuation, I would go for Business A.
My first offer price is of course the NTA but doubt it would be accepted. RM77K
Next offer would probably be 12 mth earnings x 3 = rm300K.
Maximum I would offer is 12 mths earnings x 5 = rm500K.
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1 Year ago
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I agree with Max. Either Business A or B will be make sense to acquire. But I will rather choose Business A because it able to keep inventory low and cash high. To me, both NTA should be the same.
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1 Year ago
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did not bother to look at the figures given, but if sustaining income is assumed i would use the net present value of the net income stream method.
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leno21 (User)
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Last Edit: 2008/01/12 02:54 By leno21.
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lee (User)
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1 Year ago
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since u r saying it biz nature is selling pharmaceutical products, i assume it is in retailing biz.
is biz A have its competitive advantage?
retail biz of pharmaceutical products is very competitive now. Is RM 100K profit = after paying for rental, salary, etc?
Is it sustainable in long term?
is the biz offering service more or products more? if more service, then we would need a capable person to manage it. if more on selling products, then we will be exposed to price competition.
is there any reason for the owner to sell the biz?
can us be sure that there wont be another person setting another shop beside us selling the same thing at a lower price? worse scenario, what if the former boss decide take your money and then open the same shop beside u? your customer will go which shop?
just my comments on retail biz since i also in the same :)
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leno21 (User)
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Last Edit: 2008/01/12 02:55 By leno21.
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1 Year ago
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Still same method.
First I would offer the NTA price.
Then I ll offer 12 mths profit x 3.
Final offer is 12 mths profit x 5.
Anything between NTA and 12 mths profit x 5 is okay to me.
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lee (User)
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1 Year ago
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With competitive advantage, Max suggestion is good for me.
Is it a retail pharmacy in biz A? If it is, then it seems like very good offer.
When the inventory is 50K (very low), the revenue 42K/month is fabulous.
Not to mention 20% profit margin. WOW
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