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Negotiating Business Deals/Buy flower wholesale business

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Question
I am interested to buy the wholesale flower business.

, the flower wholeseller operate 9 years, second owner bought it in 2009. The slow season can sell $ 50k, high season over $ 100k, owner will let me see all the papers and long stay to watch to see what she said is true.
The owner bought wholesale flowers then mark up 250%.

The space is 4500 square feet, $ 4000 rent, huge walk-in cooler, 4 rooms, good location.

She hire one full time and one part time employees, that is all. Hour Mon. To Sat. 7 to 4.

The FW owner asks for 200k, she bought for 180k.  She said price negotiable.

She does not do marketing, only sell to local floral retailers.  

Is it a good buy?  What Should I see to evaluate this business?

Need your direction, thank you.

Answer
Dear JJ,

Business purchase price is based on seller's discretionary earnings, not gross sales. I would suggest to read my article Business Valuation For Business Buyers.

The multiplier used for getting a purchase price is pretty tricky to calculate. It depends on many factors. However, generally for small wholesale businesses it's between 1.5-2.5.
I know, it's a big range, but without running comprehensive business valuation I can't be more specific. I hope it helps.

Negotiating Business Deals

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Jacob Berenfeld

Expertise

Selling a small business, buying a small business, preparing business for sale, small business appraisal (valuation), exit strategy planning, business coaching.

Experience

I am a business broker with over ten years of experience helping small business owners to sell their businesses. I am a small business owner myself, managing partner with Global Business Group - California business brokerage firm.

Organizations
BIR Business Brokers Network

Publications
You can see my articles at Small Business Blog, http://www.gbgusa.com/small-business-blog.html. You can also read my discussions and answers on www.linkedin.com.

Education/Credentials
MS in Electronics, licensed California business broker.

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