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How can I be sure the asking price for a business is worth it?

Tim Berry answered September 11, 2007
URL: http://www.entrepreneur.com/answer/221112
You can never really be sure, but you certainly need to make sure you work with the right professionals including a small business attorney and business broker and possibly CPA, and you also need to make sure you get valid information (your professionals will help you make sure the information is valid, using deal terms like disclosure and so forth, that will put teeth into disclosure. That information should include detailed past financial results with some weight of law like actual tax forms, details on assets and liabilities, and of course, details on actual sales, costs, and expenses.

Having all that, you've just started. You need to compare this business to others like it, just like when buying a house you compare similar deals in houses. It's not simple but it's very important.

Next step: find the right attorney and broker. Get help.

Tim
Tim Berry is the chairman of Eugene, Ore.-Palo Alto Software, which produces business-planning software,
He founded Bplans.com and wrote The Plan-As-You-Go Business Plan, published by Entrepreneur Press. Berry is also a co-founder of HavePresence.com, a leader in a local angel-investment group and a judge of international business-plan competitions.