My partner and I are inquiring about purchasing a local coffee shop. Owner would like to retire and it’s a profitable turnkey business; however the asking price is shockingly high. The owner has included “goodwill” as a little over 2/3 of the asking price. The building is leased not owned which to me feels like the customer base isn’t promised if we lose the lease in a few years due to unforeseeable circumstances with the landlord. I’ve looked up comparables for buying actual buildings on the same block and they aren’t that much more expensive than what she’s asking for her business only.
The owner has turned over financial records from the past 4 years to us, but I need a business valuation and I’m not sure how to do that. Any advice about valuations and what “goodwill” is worth would be appreciated. Thanks.
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