[alutwick]

I am considering buying an auto towing business and I'm not sure how to decide what is a fair price for this business. It is a well established business in a small town, but being a service business, there aren't a lot of assets. Just looking for some advice on how to put a fair dollar amount on this type of business.

[Fr_Chuck]

Do they have any contracts with the city or state for towing abandoned autos ?
Have you reviewed not only their accounting sheets but seen the last three or four years income tax filings to see what they are showing as true profit or loss.

How is it established ? Will you be buying the name ? Will there be a contract that stops the seller from opening a new business in the local area for a number of years ?

But really the only value is any written contracts for future business from repair shops, or the city. And the value of the equipment.
It is great they had maybe 10,000 tows last year, but that is no promise of future tows.

Perhaps offer a certain amount of money for the equipment, than payments over the next one to three years of a percent of business.
It is always a risk to try and pay for value of future business. That money could be used to advertise a new business if you just wanted to start a new one.

[alutwick]

This is helpful advice. This deal is just in the preliminary stages at this point, but I want to make an informed decision. This and any advice is much appreciated. Thanks

[Stringer]

We are a service company in business for over 20 years.

In our Articles it was determined by our attorneys and accountants that 80 to 85 % of the average of the last three years of total gross sales was a good figure.

This included equipment, contracts, length of existing contracts, years in business, good will and internal structure of the company.

I paid a lot of money for this info, enjoy my friend.

Stringer