This profitable supplier of branded sports fitness equipment and other sports goods has been in business for over twenty years. Seventy percent of its business is being sold via online channels. The company for sale owns a number of highly valuable Brands, which for purposes of the valuation, have simply been included at no value.
During the last years, sales and profits have increased steadily, and the foundation has been laid, for this trend to continue onwards. So the Asking price had to be calculated on the average of the past two years’ net profits and the following two years’ projected profits.
Except for the down payment for the business and stock, the Buyer will also have to cater for the ongoing cash flow requirements of the business, because the current owner will be collecting the debtors for his account, and paying the creditors.
Current owners are willing to sell their loan accounts, and for the deal to be structured in that manner. This is a significant benefit to the Buyer, and the net value has not been taken into account in valuing the business. Continuity of operations is essential for the projections to be met and more.
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