Here are a few key questions to consider: 1. Is the owner currently handling the daily operations of the business?

2. Will he keep doing this after the business is sold? It's usually safe to assume he won't.

3. If so, what would it cost to hire someone else for this role?
Remember, the business needs someone in charge, and you should include the cost for this position.

Look out for the following:
1) The owner doesn't include his salary in the profit and loss statement; he only takes owner draws. 2) The owner has set a very low salary for himself.
Overall you can often save a lot of money in this area by getting advice from an expert. If you have more questions, feel free to send me a direct message.

It depends. How involved is the current owner in the operation and how much do you expect new ownership to replace that management or leadership function? At the most basic level, you have to account for the costs of their value-add to the business - either with human capital or cash.