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J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4385
Experience:  Experienced and trained in the area of business law.
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a) Can you advise, how do business sale agents/business buyers

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a) Can you advise, how do business sale agents/business buyers calculate the sale value of a retail store/restaurant?

I run a self-serve frozen yogurt store in California with following numbers: Gross Annual Sales $500K, Total Costs $320K ($120 products used, $100K rents + misc, $100K employee wages), annual net profit $180K.

Store build-out, inventory and equipment cost is $250K. Store needs minimal involvement by owner (less than 10 hours/week); mostly managed by employees.

b) Based on above information, what will be fare market value if I want to sell my store?
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J.Hazelbaker :

Hello. Thank you for using JustAnswer.

J.Hazelbaker :

These days, calculations are made using a multiple (2-4 times) EBITDA.

J.Hazelbaker :

EBITDA is Earnings Before Interest Taxes Depreciation and Amortization.

J.Hazelbaker :

Here's a quick link on calculating EBITDAL

J.Hazelbaker :

J.Hazelbaker :

I see that you are still offline. Please let me know, if you have follow-up questions when you log back on.

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Customer: replied 6 years ago.
Will review this formula today, ask any flowup question and accept. Thanks
Sounds good. Please let me know, if any follow-up questions arise.