Discussion Question 1
Deciding to sell your business is one thing; determining the selling price is another. How would an owner determine the selling price of his or her property? Let’s consider a situation where you want to close your business outright and “cash out” your property. For this purpose, you need to set a selling price for your property. However, before quoting a selling price, you need to determine the value of the property by comparing the prices of like properties sold in your area over the last three or four months.
- What methods would you employ to arrive at the valuation price of your property?
- In your opinion, would you be able to find the information on your own, or would you contact someone to obtain this information? If yes, how? If no, whom would you contact for the information?
- Will obtaining information from another individual cost you? If yes, how would you know the value set is correct? If no, why? (Hint: For information on these questions, you may contact a business real estate person in your area.)
Discussion Question 2
“You have decided to sell your coffee shop. How do you determine the market value of your business? A good selling price should neither be quoted too low, causing you a loss, nor too high, making the sale unattractive to buyers. If you want to discover a fair market price, you will need to conduct a little research before hanging the “For Sale” signboard on the door of your shop.
- What methods might you employ to arrive at the market value, considering you do not own the land or building but are leasing with two years remaining on the lease and need to sell only the tangible assets?
- In your opinion, would consulting one or more professionals be of any assistance in determining the market value? Why or why not?
- Should the unexpired lease be considered an asset? Why or why not? (Hint: For more information, you may consult an appraiser.)
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