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Can someone tell me how to value my inventory in a business sale?

Is it based on cost, retail, or what other methods should be used? Thanks.

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Answers (5)
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Biz Capital Solutions
Henderson County, NC

Your business structure (corp, LLC, etc.) affects this subject but generally FIFO is safe. Rob Ritch

Apr 5, 2009
Fayaz Karim, MBA, CA
Subway Valuations, Business Searches
Orange County, CA

Usually at cost, FIFO principle. Work in process needs to be estimated as 30, 50 70% completed, or on a material and labour cost basis if you can do that. Finished product ready for shipping can be at your manufactured cost and so on. Really quite simple.

Fayaz Karim, MBA, CA

Apr 3, 2009
Ari Casper
Petro Business Services, Inc

Luke, It will depend in part on the type of business that is being sold. Consumable inventory is typically sold at cost. Alcohol can not be financed. It must be purchased for cash and there may be other regulations and requirements that must be met in its transfer. No out of date consumable inventory may be sold.

Mar 30, 2009
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Owner of ABC EXPERTS a liquor license consulting company
Los Angeles County, CA

Be careful if you are dealing with any type of liquor inventory. There are various strict state liquor laws that must be followed or the seller can get in a wealth of trouble.

Mar 27, 2009
Andrew Cagnetta
Transworld Business Brokers, LLC.
Premium Broker

This sometimes get tricky, but for the most part people use FIFO. Basically what you bought it for, is what it is worth in the deal. Where it becomes tricky is if you have inventory that changes in value often (art, gas, trendy items, etc). Oh yeah, the inventory cannot be obsolete, it must be salable.

Mar 18, 2009

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