My assumptions in buying this business are that it will keep making profits after the acquisition. Notably, there is no point in buying a business which keeps making losses. Another assumption is that the business has no debt obligations from financiers or financial institutions. The third assumption is that the seller is selling the business in good faith. Notably, one should only buy a business if they have complete information about it future of operations.

In negotiating the purchase price of the business, I would use the fluctuations in profits as a reason for the negotiation. Notably, this business makes an average of $40000 per annum in the last five years. The lowest value per year is $20000 while the highest value is $60000. I would use the lowest value of $20000 to negotiate a better deal since this business may continue making profits of this value for some time. what are the reply of this discussion.

Suppose that a business available for purchase has shown an average net profit of $40,000 for the past five years. During these years, the amount of profit fluctuated between $20,000 and $60,000. The business is in a highly competitive industry and its purchase requires only a small capital outlay. Thus, the barriers to entry are low. What are your assumptions? What value might you use in negotiating the purchase price