Acquisition? What’s Your Company’s Valuation?

small company acquisition
For any acquisition it’s important for both buyers and sellers to have a dialogue about company value.

 

Buyers and sellers of companies of course have different agendas. But by looking at the cold, hard facts, they can often come to mutually beneficial deals. The devil, though, is in the details, so make sure valuations are conducted properly.

In a merger and/or acquisition situation, small companies often find it difficult to determine the appropriate value at which they should sell their business. Of course, standard methodologies for determining company values do exist and are widely used. However, small companies often have little calculable intrinsic value as a stand-alone entity at the time they’re selling, but they certainly do represent a valuable asset to the potential buyer.

From a Buyers Perspective

From a buyer’s perspective, valuation is a balance between what they can afford to pay given strategic and economic value that the acquisition will bring and what they believe is “fair market value” for the asset, based on standard approaches and methodologies. The more acquisitive a company is, the more important a consideration of “fair market value” becomes, as it needs to be seen as a disciplined buyer in order to be effective.

For Sellers

It’s then critically important for sellers to prepare a point of view to help potential buyers understand and see the value of an acquired business. While buyers are reluctant to pay for all the value that an acquired asset will bring to them, given the execution risks involved post-acquisition, engaging them in the discussion and making them aware of the possibilities form the seller’s perspective helps justify the a request for a higher price.

 

 

RELATED POSTS

The 9 Rules to Help Any Exhibitor Succeed at a Trade Show

The 9 Rules to Help Any Exhibitor Succeed at a Trade Show

Helpful tips for entrepreneurs to navigate trade shows.   Exhibiting at any of the hundreds trade shows that take place in the US can be a challenge for any seasoned vendor. With all the planning that goes around it, it’s a wonder how many business owners feel...

4 Definitive Examples to Understand and Serve Your Customers

4 Definitive Examples to Understand and Serve Your Customers

These four company case studies have yielded success across industries Running on Innovation, A New Solution for City Dwellers, Focus on Customers. Learn from these companies that are doing it right. Recently, I attended a public forum called Healthcare in the 21st...

Video Gallery

Johanna Godinez Latin Biz Today partner, International Yoga Day: Celebrating Unity and Wellness on June 21st
Modern version of Stoic philosopher Epictetus
A professional leads a cybersecurity training session for employees, emphasizing best practices. The photography captures the engagement of participants, showcasing the educational aspect of safeguard
Hispanic bearded male businessman trainer teaching coaching new recruitment African American female businesswoman employee in formal suit sitting studying learning company graph chart strategy
The presence of a robot using a computer. Office keyboard being typed on by machine. future IT group,.
Latino Streetwear Entrepreneur Latin Biz Today
Chef Lorena Garcia cooking with a wok
Latina Chef Loren Garcia

Polls

Which item currently represents the greatest hurdle in the growth of your business?(Required)

Sign Up for the Latin Biz Today Newsletter

PR Newswire

Featured Authors

Innovation & Strategy

Money

Four Basic Principles for Raising Capital

Four Basic Principles for Raising Capital

Outside investors want to understand a business' strategy as well as its financial statements.   The need to raise capital from outside investors requires a great deal of preparation across multiple dimensions. Among many things, investors look to understand...

Talent/HR

Legal

Marketing

Culture

Fashion

Food

Music

Sports

Work & Life

Mindfulness

Health & Fitness

Travel & Destinations

Personal Blogs

Pin It on Pinterest