VALUING A SMALL BUSINESS
The value of any business is not the value told to you by an attorney, an accountant, a valuation specialist, a consultant, a business broker or someone who just sold a similar business. The value of a business is what a buyer is willing to pay.
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Determining fair market value.
Many business brokers / intermediaries will prepare valuations on business for a fee. However, if they are in any way involved with either the buyer or the seller, this valuation is not independent. Accordingly, most lenders will find it difficult to use this for financing the business and buyers and sellers should be aware that the opinion may be biased. Most of the valuation organizations that issue credentials for valuation services require that the appraiser be independent. Business Acquisitions, LLC will only prepare a “Brokers Estimated Selling Price” for those businesses that want to use the company to sell their business or to value a business we are assisting with the purchase. Business Acquisitions, LLC will refer to other valuation specialists requests for valuations where we are not involved with the transaction.
Value Based on Buyer
Life style buyers
Income or capitalized earnings or discounted future cash flows
Free cash flow
Adjusted book value
Public company guideline methods
Analysis of prior sales of stock
Rules of thumb
Owners discretionary cash flow multipliers
Cost of a Valuation
Software to do it yourself create a valuation of your business