Saturday, November 3, 2012

How much would you pay for this business?

First of all, I feel like such a dufus for selling my puts Thursday given Friday's tankage but you know what, I'm over it. This leaves my longs exposed without a hedge, but  my longs (primarily hwo.to) continue to not be market sensitive, so for now it's not a concern.

Ok let's get on topic here. Let's say I have a business which I'm willing to sell because I've decided to spend the rest of my days playing golf (even though I've never played a round of golf in my life).  Here are some key facts about this business:


  • The primary operation of the business is the selling of canned fruits and vegetables which are derived from farmland that I have a 30 year pre-payed lease on. 
  • 2012 profit is expected to be about $9.5 Million with historical profit margins of about 27%.
  • Although the 2nd quarter tends to be the weakest, I have been steadily profitable every quarter  
  • By the end of 2012 I will likely have about $13 Million in net cash (cash -debt) and another $13 Million in net receivables (receivables - payables). 
I'm running near full capacity right now so there there won't be much growth in profits without capital investment but I can certainly maintain existing levels of profits indefinitely as is.

Based on the above facts what do you believe is a fair/reasonable value for this business? Please post your answer in the comments.


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