The asking price is determined using a cash flow and asset methodology. Cash flow is the sum of net income from the business plus any non-cash expenses, non-recurring items and any seller’s personal expenses. The asset methodology takes into account what it could cost to open a similar business in equipment and square feet. A multi-factor multiplier is applied to the cash flow based on the condition of the business and the asset value is added to that result.
For this business, a three-year weighted cash flow is applied as the recovery of gross sales is above average. This business has the higher sales and better than median SDE, coupled with that this is Northern California’s number 1 gross sales store the multiplier applied in this case is 3x.