Buying an Existing Business
Please respond to the following:
- From the e-Activity, discuss the best possible method for determining the value of the business you selected. Explain your rationale.
- Create a strategy for negotiating the purchase of the business you selected in the e-Activity.
While checking online I found a business in Augusta for a convenience store listed for sale in Augusta Ga with the asking price of 165,000. The listing states it is located at a busy intersection near our military base here, which means it has potential for being a money maker. To determine the value on an existing business that would work the best for me I looked over all three, the balance sheet technique, the earnings approach, and the market approach, it appears that the balance sheet would work best for me. The balance sheet technique is the most easiest to use as it is pretty straight forward using the formula of net worth= assets-liabilities.
It appears that the asking price is not as important when purchasing a company as much as the terms and conditions that go into the contract are. Having favorable terms helps keep a healthy cash flow. When negotiating a deal it is important to go in with what you want, identifying what is important to me the new owner. Listed below are negotiation tips from our reading:
- Know what you want to have when you walk away from the table
- Develop a negotiation strategy
- Recognize the other party’s needs
- Be an empathetic listener.
- Focus on the issue, not on the person
- Avoid seeing the other side as “the enemy
- Educate; don’t intimidate
- Be patient
- Remember that “no deal” is an option
- Be flexible and creative