Even considering the fact that Salk was a small boutique brand, I am very surprised that he considered the total worth of the company to be 300k, and then lowered it to 100k, including equipment, designs and brand equity. they do after all have a following, and they made a good product and have a reputation for excellent customer service.
Yes, when I was involved in small business valuations you would use 3 years of net profit, minus the fair annual wage(s) of the owner(s) compensation to get an estimated value of a business...you would use this method during a divorce in a community property state or when a business partner wants to cash out....as a guide.