If you are planning to buy a ready-made business and do not intend to acquire a "cat in a sack", experts recommend conducting a preliminary evaluation of the object for sale in order to determine the pros and cons of the transaction.

The economists developed the basic principles for evaluating the finished business in the middle of the 20th century. These fundamentals are still used today in the world practice as effective tools for monitoring financial risks.

The relative simplicity of the valuation methods allows you to analyze the financial state of an enterprise for several hours and buy an effective ready-made business.

In order to find out how profitable the proposed transaction is, the following methods are used:

determination of possible costs (cost);
structural analysis of the revenue side (profitable);
determination of the cost and terms of sale of similar enterprises (comparative).
These are the classic methods in which the data of accounting and financial reporting on the object are assessed, as well as the general situation on the market.

Many private accounting firms, in addition to the classical assessment of costs and revenues, offer their customers an express assessment. To conduct a rapid assessment, the expert will need a minimum of data, but as a result, the potential buyer will receive a maximum of useful information. If you doubt that you will be able to assess yourself, we advise you not to take risks and turn to professionals.

Description of the techniques

The cost approach allows you to determine what investments are necessary to create a similar enterprise from scratch on your own. For such analysis it is necessary to obtain from the seller information about the assets involved in doing business. Calculate the cost of creating similar assets can be based on market prices. Professional appraisers not only own information on the value of certain assets, but will also conduct an assessment taking into account the refinement coefficients that will help to obtain the most reliable information.
When using the income method, the presence, structure and magnitude of the enterprise's revenues are assessed. As a result of such an assessment, the prospective buyer will receive information on how the income of the analyzed enterprise has been formed in the last few years.
The method of qualitative comparative analysis (QCA) is one of the most difficult for independent application. To make a qualitative calculation of the cost of business using this technique, it is necessary to have information about the price at which similar enterprises are sold, and what conditions are then respected by the parties to the transaction. Such information is only available from professional appraisers.
Each approach makes it possible to study one of the aspects of the enterprise, which ultimately gives the buyer a complete picture of the state and business prospects of the object being offered for sale.

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