I have a friend in the business wanting to sell his shop. He does AGR and tinting. I am thinking of buying his shop. He wants his yearly income x 2 for the shop. What do you all think? It is in a very tough cash market.

Seek the counsel of a good CPA. CPA's are better equipped with helping you evaluate a fair purchase price.

The cash flow factor that you should pay depends on a lot of things. The more cash flow, the higher the factor (to a point).

When the cash flow gets smaller, the factor gets smaller.

For example, if the total cash flow was $50,000 per year, I wouldn't pay anything for the business. You can get a job and make almost as much with no personal risk (unless you think you can grow it into much more or you think it is being mismanaged and can be immediately fixed, etc.)

You need an accountant, and then you also need a decent business lawyer to draw up the deal for you.

What is the blue sky involved, will he stay and help with the transistion? Are the accounts good loyal accounts? The cash flow is very important, but some things need to be added back to the cash flow that the current owner may be taking out as business expenses. A good CPA is a defenite must...............

with the current market conditions, i would only pay for good inventory, no blue sky.

two times his wages, gee i would be paying you these past two years, ha ha. it will get better, i'm not sure purchasing an existing business has any advantage at this point, a startup would be cheaper.

i doubt there is a glass business anywhere that would be showing growth numbers that would justify a purchase price like that.

I think buying an exsisting shop with a good solid clientel (ins would be a huge factor)Is better than starting on your own now.There are alot of reasons for this,glass buying power,marketing(hopefuly the previous owner was smart on doing this)network setups,if you are planning on being on any.If you buy it as a s corp than you can keep the same federal tax #,if you have it as an LLC than you have to get a new tax #.Beleive me,if that shop is already been established on networks and if you get a new # its like going down the ladder.There is alot of crap to go through to reregister on networks.Alot of you will disagree with me,but I have seen many friends try it both ways and the key is buying a good buisness you can build on,you have to really do your homework to make sure you are buying a good name.Any tools,vans,employees,inventoty?There is so much to look at,It just seems these days in the agr industry it is very tough to start out new and grow.GOOD LUCK!

Thank you all for the info, The tax # thing has changed my mind....df