I have decided to buy a restaurant business
that is presently owned by five people. The asking prices for this business is $465,000. The method I intend to use to evaluate the value of this restaurant is the asset-based approach. The liquidation asset-based method is the best way to determine the total value of the restaurant. This is because it would help me analyze the net cash that would be gotten from selling all assets and paying all liabilities of the company. Since this is a partnership, all the assets are owned by the company and are included in the sale of the company. The liquidation asset-based method is the best to use since it will provide for the separation of personal assets owned by the partners before determining the value of the restaurant business.
My negotiating strategy for the purchase of the business
would begin with the determination of the cash range that I am willing to pay for the restaurant. This will play an important role in ensuring that I stick to the budget. After this, I would use the current financial situation of the business to my advantage to ensure that I get a deal that would favor me. For instance, if the restaurant has been in a declining financial situation during the current fiscal period, I would use this to negotiate a lower price than the value the partners seek to sell the business. Finally, an outlook on the strengths, weaknesses, opportunities, and threats to the establishment would play a significant role in the determination of the amount I am willing to purchase the business. These considerations have a major impact on the decision to buy, as well as the amount I would be willing to pay for the purchase of the restaurant.