The Business Located in a midsize industrial (but art-friendly) city in the Midwest, this art gallery makes nearly 80% of its sales to corporations and the rest to individuals (who make up 70% of the customer base). No Norman Rockwell prints or velvet Elvises here: the gallery -- whose average sale rings in at around $500 -- features a mix of colorful abstracts and soothing landscapes as well as unique sculpture, pottery, and art glass.

Financial Summary 1991 1992 1993
Gross revenues $342,000 $357,000 $294,000

Recast earnings before $76,000 $75,000 $73,000

depreciation, interest, taxes, and owners' compensation

Price $91,000 (includes $25,000 in inventory at cost)

Outlook The mood in the art world is definitely one of letdown after the frenzy of the late 1980s. (That's when total industry revenues, which most insiders now put at more than $2 billion, climbed at an unprecedented rate.) Individual collectors are looking at their discretionary income more judiciously. (Art may be soul sustaining, but it's hardly life sustaining.) And corporate purchases, which also swelled in the sanguine '80s, have dropped off even more. But the, uh, picture looks a little prettier from here on: since many individuals buy art as decoration rather than as an investment, insiders expect the art market to turn around as the housing indus-try's fortunes improve. Sales to the corporate sector are not expected to rebound as quickly.

Price Rationale To arrive at the asking price, the broker subtracted $30,000 from 1992's earnings (the only figures then available) to pay a manager and then multiplied the result by two (a typical multiple for an asset-poor business like this one). Art galleries don't get sold very often: they're either passed on or past tense. The value of a gallery has a lot to do with the owner's knowledge and taste (or lack thereof), factors that don't necessarily transfer with the business -- or come with the new owner, for that matter. Since the pool of buyers is therefore limited, the price should come down to about $85,000.

Pros The price, with just a soupÇon of adjustment, seems to make sense. And you could live every art-history major's dream, organizing exhibitions and cultivating new artistic voices. You might even discover the next Julian Schnabel.

Cons You could also discover the next Gilbert Schmidt. (Gilbert who? Exactly.) And the art market isn't exactly vibrant. So don't give up your day job: if art dealers seem like a moneyed lot, it's probably because they had it to begin with.

-- Christopher Caggiano

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Torrence Enterprises, 815-399-4410. n