I'm Buying A Company! How I Value and Assess Businesses Before Taking Them Over

I'm Buying A Company! How I Value and Assess Businesses Before Taking Them Over Whether you are planning to sell your business or simply want to know what it's worth, there are a number of options for giving your business a monetary value. The important thing to recognize before beginning is that any eventual sale price of your business will be negotiated between you and the buyers. This means that any value you come up with from these calculations will not be set in stone. However, these calculations are useful for providing a baseline from which you can argue for your business's value. Please subscribe

Gym Owners go here for marketing: https://moregymmembers.com/ Gym Owners go here for Free Financial Modelling Tool: https://kit.moregymmembers.com/model Video Transcription: Hey, legend Riley Stewart here today. I'm doing something quite interesting, which is looking at a company for the buyer. So if you are interested in maybe taking over a business, investing in a business, buying a business, or even selling your business, then this could be interesting for you. So make sure to stick around for it. Now, what I'm looking at, firstly is the area. So something's come along. Right? The first thing you want to look at is the area. If it's a physical business in a brick-and-mortar location, so this one is close to Sydney. And because of that, looking at the map, and I can't show you exactly what I'm looking at, because it's all confidential. But looking at the map, we can see that it's quite close to the inner city. So that means that if we were to fix this business up, it's going to be expensive. So what I want to know is how much does it cost to take over? How much is it going to cost for me to fix it? How much money can I make on going from this business? What are the risks involved? And then I want to start looking at that, looking at their accounting records. And that's what I'll dive into now, which is how I figure out how much the business is worth for me to take it over. So I know that this business is losing money. Now, if a business is losing money, it's worth significantly less like significantly less typically because it's not producing a positive cash flow. So the number of buyers is going to be significantly reduced and I can pick it up for a cheaper cost, but I also have a much higher risk. So it's losing money. Um, how much is it going to cost me in marketing to fix this thing up now? Because we have done a lot of marketing and we continue to do that for a lot of gyms. We've won the awards behind me. I know roughly how much it's going to cost. I'm expecting about $50,000 in marketing to fix this thing up because it's in, in, uh, Sydney, if it was on the outer suburbs, it would probably cost me more like 20,000 or 30,000 to fix it up in marketing to get it profitable again. So that's one thing I need to take into consideration. Now, then what I'm looking at is there are two key pieces of information that I need to determine what it's worth. So firstly is the profit and loss statements. So the profit and loss statements show me on a month-to-month basis. I want all the history of each month, what revenue did it do? Where did that revenue come from? What were all the expenses? And then how much were the total expenses leaving us with the profit? So really we want to say, where can we bump up the revenue?