I am currently in negotiation with the owner of the small outdoor bootcamp I work for to purchase part of the business. I am looking to buy out the client list of the morning classes for which I teach. The owner has giving me a breakdown of what she thinks the classes are worth and is valuing the classes much higher than I would have thought. Revenue aside, she includes my current salary as the “owner comp add back” in the total discretionary earnings number since I am already teaching the classes and as the future owner the money will be going to me. I am having trouble grasping this as I still need to pay myself a salary and it seems like paying her for my income doesn’t make sense. Has anyone gone through anything similar or can provide some advice?
I keep thinking I’m done writing to you, but then a little lightbulb flashes on in my head (I’m a former tax accountant and also have an MBA).
One of the best books I read on negotiation is, “Getting to Yes without Giving in.” It’s not a super-long read, and it talks about how to list out all of the things you value about a transaction, not just the revenue, how much it’s “worth” to you, how much it’s “worth” to the other party, what items you don’t care about, what items they don’t care about, and what items you both really care about.
If this purchase transaction is of a significant amount to you, it might be worth buying this paperback and taking a quick read.