Can I buy a business outright with my own money?

The answer to this question is simply…..yes you can. But there are many caveats to the answer; a lot of which revolve around the value of the business in question and the amount of capital which you have to deploy. These are two fundamental aspects which are constantly referred to in the context of a private individual buying a business. Consider each in turn:

• Business valuation

Let’s firstly take the valuation of the business. A quick method of deriving a valuation would involve using either (i) the net asset value of the balance sheet of the business. There might also be a notional addition to account for goodwill over and above the net asset value or (ii) a multiple of adjusted ebitda. Normally for SME purchases, the range of 3-5x adjusted ebitda is appropriate. The ebitda is often derived from taking a mean average from the past 3-4 years accounts.

• Private capital to deploy

The amount of