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Pricing Your Company for Sale
Your prospective buyer has scrutinized your financials and you now find yourself sitting across from them at a big round table--the question du jour: price. You have a very specific idea about the value of your business… so do they. Chances are these two numbers are quite different. Do you throw your arms up in the air and storm out of the room in frustration? Not just yet. This 6 page white paper will give you insight on the interaction between pricing metrics and deal structure. With this in your arsenal, you'll be prepared to negotiate the value you'd like to get. Pricing: “You can’t always get what you want”, or can you? Your prospective buyer has scrutinized your financials and you now find yourself sitting across from them at a big round table--the question de jour: price. You have a very specific idea about the value of your business… so do they. Chances are these two numbers are quite different. Do you throw your arms up in the air and storm out of the room in frustration? Not just yet. Determining the value of a business is the part of the buy-sell transaction most fraught with potential for differences of opinion. Buyers and sellers face conflicting interests and rarely share the same perspective; each has a distinct rationale guided by logic or emotion. The motives behind the transaction will influence each party’s valuation of the business in addition to the financials discussed in the previous article. The buyer may believe that the purchase will create synergy or an economy of scale because of the way the business will operate under new ownership or see the business as a particularly good lifestyle fit. These factors will likely increase the amount of money a buyer will pay for a business. The seller may have a greater than normal desire to sell due to financial difficulties or the death or illness of the owner or a member of the owner's family. The external motives of each party will likely significantly influence the value of the transaction. In order to successfully conclude the transaction, both parties must agree on a satisfactory price and understand how that price was determined. Factors That Determine Value The topic of business valuation is so complex that any explanation short of an entire book does not do it justice. The process takes into account a myriad of variables and a number of assumptions. Shannon Pratt, a noted business valuation expert, names six of the most important factors: [continued...] Want to know more? Download the White Paper "Pricing Your Company for Sale" for just $39.95. People who ordered this paper also ordered: |
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