How do you value a business?
Hello. I am writing on behalf of my mother in law. She started a cafe up with a friend, but the partnership has failed and my mother in law has left the business. Her business partner says that the business needs to be valued by an accountant, is this correct? And can my mother in law hire her own accountant at this point, to aquire her own independant valuation (if this is neccessary?). Thanks for any information you can give me.
Small Business - 3 Answers
People Answers, Critics, Comments, Opinions :
Answer 1 :
I dont think so... she can leave if she wants to but if she pau her share that is it, done. but if this is about her selling her half than she should to get teh best price. answer mine http://answers.yahoo.com/question/index;_ylt=AvqOhKwjMyiye6bRszIZBe_sy6IX;_ylv=3?qid=20100824214340AAI0sxC
Answer 2 :
The value of anything is the present value of all future cash flows. You need to find a finance expert to evaluate this. An accountant might be able to do this, but it will be a subjective number based on whether you believe the business will grow or contract. At the very least an accountant should be able to point you to the right direction. Hope that helps
Answer 3 :
An independent valuation by a specialist accountant or valuer that has knowledge of this type of business would be the route to take. The accountant should be decided upon by both partners so that he will be "Independent". Based on his valuation the remaining partner must then pay up the 50% of the total to the departing partner. Failing this or failing an agreement, then the business should be sold and the profit split 50-50. All this will be less the accountants fee. Important that you have this specialist accountant or valuer and not just any old accountant.
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