k b!tches im here. Sorry Oldman had to page me:

first I would look at his financial statements. Usually a solid business would have some sort of financial statements either on Quickbooks, PeachTree, or another accounting software package.

When looking at his financials see how much revenue he makes over the past 3 - 5 years and also compare that to whats listed on his expenses to get a feel as to what he makes versus what he has to pay out on a regular basis.

I would base the selling price on the balance sheet portion of the financial statements:

Assets: Cash in the bank (as of a certain date), Accounts Receivable (amounts still owed by current students), pre-paid items (insurance for the entire year paid upfront), Inventory, Fixed assets (Bags, computer equipment, leasehold improvements)

Plus

Owner's Equity (start up costs as well as net income/loss factored in each year the school has been operating)

Plus

Goodwill (does his name or school have any reputation. That will have intangible value. this would be decided amongst you two)

Less

Liabilites: short term loans (ie credit card debt), long term loans (ie start up loans), taxes due to the government.

Equals:

A round about selling price.

If he does not have any financial statements (which would cause for some concern) you should ask to see his Schedule C filed for his income taxes for the past 5 years to see if the school makes any profit in the eyes of the IRS and then decide to value the assets within the dojo. Please bear in mind that accounting for income taxes are not the same as GAAP (Generally Accepted Accounting Principles) used to create financial statements used to obtain loans and present to possible buyers.

Also take the advice of CXT as he has made some valid points.

If you have any questions you know my number Schanne.
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"I'm gonna come at you like a spider monkey"