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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4473
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I have been renting at a salon years. The owner want's to

Customer Question

Hi, I'm Emily. I have been renting at a salon for 3 years. The owner want's to sell to me. The problem is she has no profit and loss statement or revenue, she is basing her asking price on Her yearly income $34,000. Witch in my opinion you can't by clients. Shouldn't she sell for what she has put into it chairs, shampoo bowl...
Submitted: 8 months ago.
Category: Finance
Expert:  Rakhi Vasavada replied 8 months ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

You can go both ways. More on the basis of what she is asking. Let me explain.

She would not ask on what she has put into it, i.e. chairs, etc., and other assets. The reason is, over the period of time, these assets would depreciate and will have much lesser book value. Further, the valuation of these assets will have NO bearing on the revenue the salon earns.

So, more proper method would be to base the price on the yearly earnings of the salon. You may decide the multiple and mutually decide. But let me confirm, she is primarily in right direction.

I wish you good luck.

I am sure this would help.

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Warm Regards,