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Tobbe, post: 197786 wrote:
Hi all,

My first post in here apart from my introduction.

Can you help me with how to go about doing due diligence on the value of a business for sale that I am interested in buying.

The broker selling the business has arrived at the value using these methods.

1/ Goodwill – take a multiplier of 2 over the annual adjusted net profit as the net profit is over $200,000 per annum + second hand value of all the inventory of plant and equipment.
2/ ROI – it’s found to be between 31%-42%. They scored the business using 25 risk characteristic categories.
3/ Comparative Analysis Jarrett’s Guide

2013 financial year numbers were $3.3 Million Turnover with a resulting Net Profit of $509,600 (before owners salary).

Would you seek independent advice from accounting type companies or stick with the bank?

Any advice would be welcomed.


I’d most certainly be getting additional opinions and advice. Especially from people in the know of that particular industry.

Being a steel & aluminium manufacturing business how will that be impacted by changes to the industry? Like Alcoa closing for instance. What about the cessation of car manufacturing in Australia?