Looking at an opportunity for a group of investors, who may be interested in purchasing a local small business. It's an industrial service business that's been in operation 40 years by the same owner. I know the invstor guys know how to do this, but I want to educate myself. How would you value this small business?
- Owner operated with 2 unskilled laborers
- Steady work, lots of repeat business, but likely no long term contracts.
- Some expensive capital equipment, all fully owned, but nothing custom or unusual. Probably $500k to buy new replacements
- Doesn't own the land/shop he operates out of.
- Good potential of increasing the business, as he hasn't been putting much effort into that.
- No local competition, although several companies in other cities that do this service.
If his Annual revenue is X, his costs are Y, and the depreciated value of his equipment is Z, what's his business worth? Thanks in advance, beyond university.