How would you value your Locksmith operation?

First question I would ask is, for what purpose? Insurance? Selling part or all of it? Value to the community?

It will be a bit like this:

What is two plus two:

Engineer 4 Scientist 3.999 Accountant - What answer do you want? Economist - It all depends.

In all seriousness, for a well run business which is not over-capitalised (ie excessive stock, blanks or under used key machines), it all comes down to a value for 'goodwill' - ie having customers continuing to patronise the business. 'Locked in' customers ie those whose keying systems you maintain which require special blanks further enhance goodwill (like that Illinois locksmith who priced supplying locks and masterkeying systems very competitively and made his real profit on extensions, extra keys and re-keying). Goodwill may be equivalent to one or two years net profit, but I could be horribly wrong.

That was a nice concise answer. Thank you.

Selling all of it.

try using quotes like the rest of the group. maybe one could tell who you're responding to.

Having a clean set of accounts for the last three years will help enhance value. When a bona fide buyer has come along and given an indicative offer you would let him do 'due diligence' after (s)he has signed a non disclosure agreement. The prospective buyer may then review the offer in the light od due diligence.

I see the dilemma. If two or more people are after your business, their offers and response to your counter offers will probably determine the 'true' going concern market value. If there is only one 'keen' buyer, you have more of a problem. I suspect if large corporations are put on the market, the vendor will ensure that there are at least motivated buyers that can be player off against each other.

Never bought or sold a business. Started mine from scratch. But here's what I've heard (FWIW)

Generally, the asking price is about what the business' average yearly gross, averaged over the last two to three years. Plus current value of equipment and wholesale value inventory (and real proberty, if any) .

Again, this is just what I have been told.

I think I've heard the same rule of thumb.

Of course, what you can actually get depends on the current economic climate, how long you're willing to hold out waiting for someone who'll offer the best price, and so on -- in other words, the same sorts of issues that make house prices negotiable.

believe you are correct Bob..

Right.

If you are heading for retirment and have time to wait for somone with deep pockets who really wants your business, you'll get more

If you're just sick of it (can't comprehend how anyone could be) and just want out, you'll probably be willing to take (way) less than it's worth just to move on with your life.

Another way to get an existing locksmith business at a low price is if it was a "one man show" and the "one man" dies. The family will want to sell the business. However......

When you buy a locksmith business you are mainly buying "accounts". If the business has been normant for any amout of time, most of the good accounts have moved on, so you are only getting the equipment and inventory (and maybe a few occational accounts that haven't called since the previous owner's untimely demise).