Business value

[Spidey]

If a business say with shareholders funds of 70k is valued at 200k, what would company be worth if the following year that turned to a minus 70k due to bad debt etc. noassets in company....

As questions like this always come up in conversations

 

[callybags]

As with anything, the value is what someone is willing to pay for it.

In your example, how is the business valued at 200k? Shareholders funds would normally be the "paper" value of a company. If it sells in excess of this figure, the difference is classed as goodwill - an intangible asset.

I would have thought that if shareholders funds turned from +70k to -70k, then all the goodwill would have been used up and the company would not be worth much.

 

[Spidey]

This would be a write down of stock and some aged bad debt. Company trading over 10 years and has a customer base and well known. Sales down due to recession and disagreements to take on new sales staff. Business has to be worth something, goodwill agree is normally above and beyond, business turnover is 1-2 millions and just need a refresh,, but one of the shareholders looking to sell and move to australia but has been offered 2k for 30% of shareholding...so a figure pulled from air, bit like the 200k, but that was done on a 4:1 ratio that some people use...

Surely he can expect more than that, otherwise if agreed he better leaving there but that might not always work either...