Ditto AlexK's sentiment - you pay for what he's done, you get to keep what you're going to do with the business.
One excellent reference book I have is "The Entrepreneur's Guide to Finance & Business" by Steven Rogers. It's a great, very practical book. It does seem to be out of print with an exorbitant price ebook pricetag on Amazon, but if you can find a copy, it would have very appropriate advice.
Selling the business makes total sense for him (otherwise it's going to wither as he retires), and buying it makes total sense for you (since it'll jump start your entry into this industry, versus trying to start from scratch).
The problem is in valuation, and I'd recommend exploring two angles that could bridge the gap. First, try to get 100% seller financing. He probably wants a check so he can head to the fishing hole with no worries, but seller financing would keep him strongly interested in the business performance and keep you from tapping assets for the purchase.
Second, there should be some concept of an earn out. In this situation, a low (very low, given the circumstances and his limited options) initial price that could then increase based on sales targets (or, if he's naive, profit targets) being met in future years would make him want to see his great ideas through - he'd have a lot of skin in the game and may stay on as a strategic advisor of sorts. That may be a pain for you to manage if he can't let go, but I'm just introducing it as a concept. If he's the kind of guy who might want to stay in the game (for free, more or less), it could be worth the trouble.
But if he's firmly anchored anywhere near $425K, I think you should use your discussions with him to find out as much as you can about the business and then start a competing enterprise. No calculation by an expert is going to knock him off of what he thinks his "baby" is worth.
Can you give a general indication of the industry and customer base? If it's a good (non commodity) industry with a lot of recurring revenue, buying from this guy may start to make more sense.