buying business, target return is 20% after paying wage to owner, to cover the extra risk of being in business.
20% equals 5% term deposit return, 10% for risk, 5% for illiquid asset risk
normally when you buy a business, you ask for a few year's tax return to look at. Normally you are given 3 years.
Adjust income that doesn't affect the purchaser, e.g extraordiary items, voluntary exp such as donation, motor vehicle
average profit of last 3 years
how much do you pay for goodwill, it depends on the busines, some will be 3 times of the profit, some just 1 time
good will tax for seller: 50% discount, 50% discount to small business owner, can roll over. Equipments tax is different. It's in the seller's favor to allocate more return to good will
Look at the business and look at how many of them incl. freehold. sometimes the owner got so fed up, they discount everything including freehold.
There are agents specialise in cash business, easy to managing business
keep investment debt and personal debt separate, split the loan!
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