Small Business Owners & Entrepreneurs

Yes, 3x to 5x NET is a common business valuation, plus inventory and equipment. A 5x would be a strong business with little risk such as a long established and easy to run franchise. A landscaping business would be more like 1x. Distribution businesses can be as low as 0.5x.

In my opinion, Good Will is always over priced, don't pay for it. Everyone things their brand is worth much more because they have invested the time to grow it, the value must be placed on how others view the brand, etc.

It sounds like you have an excellent offer with the 100% financing.

I would offer 2x net with 100% of the salable inventory value only once sold. Any other equipment 10-30% of the new value depending on how new it is (consider it's useful life, not how much it costs to purchase).

Also keep in mind a purchase price is not about future income, it's about what it's making today.