Seller business cash flow is one of the best tools, to estimate the value of the business, before buyer present an offer, or even before to consider buying that business or not, also it decides what price the buyer can offer to the seller to buy the business. The main purpose of buying a business is to increase the buyer’s cash flow, or make self-sufficiency on the cash flow, to fulfill the dreams and to attain a financial security. The prospective buyer interested, to buy an existing business, as the business that already established by the seller, and running with all possible services, implemented the trade secrets, and ideas to increase the positive cash flow of the business, and that created reputation and prides to the business.
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By buying an existing business, the buyer is passing all the hurdles of initial setups, avoiding the initial business losses, extra efforts, and just take over the running positive cash flow.
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Positive cash flow is not just the adjusted net / net profit after paying all the expenses. Some of the sellers will show their personal insurances, mortgages, professional expenses, travel expenses, entertainment expenses, child expenses, other related expenses, also; they will their salary / Management fee, bonus, depreciation, amortizations etc. All these expenses are going to add as ADD BACKS to the net profit of the business. When you add all of this expense and other personal expenses of the seller shown on the tax, which gives the exact cash flow of the business. It is always good idea to sit with your tax consultant, and discuss with him all the add backs, and they will give the exact Sellers Cash Flow of the Business or Seller Business Cash Flow.
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If you are interested, to know more about the seller business cash flow and discretionary earnings, cash flow analysis, please email us at help@bizworldusa.com, or contact us on 415-234-8833, one of our approved third party Business Appraisal / Business Tax professional will contact you.
