Major Challenges of Valuing a Business

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The purpose of this assignment is to demonstrate your understanding of the concepts learned in this week’s lessons by responding to discussion questions. the following questions are:

  • What are some of the major challenges of valuing a business? For example, how would one accurately be able to project earning potential?
  • Support your response with at least 2 academic sources outside the required materials for the course. also provide more than one citation in text
  • no plagiarism
  • 300-400 words
  • you will find the following file attachment of MGT402 ch 7 so you can refere to it for answers
Advantages of Buying an Existing Business
Business may continue to be successful
Leverage the experience of the previous owner
Owning a business guarantees a job
The turnkey business
Superior location
Employees and suppliers in place
Equipment installed with known production capacity
Inventory in place
Trade credit established
Easier access to financing
High value
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Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall.
Disadvantages of Buying an Existing Business
Cash requirements
Business is losing money
Paying for “ill will”
Unsuitable employees
Unsatisfactory location
Obsolete or inefficient equipment and facilities
Customers may be loyal to previous owner
Change may be challenging to implement
Obsolete inventory
Value of accounts receivable
Business is overpriced
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