For How Much Can You Sell Your Business?

A business is worth what someone will pay for it. The definition of fair market value is the amount a willing buyer will pay a willing seller in the absence of duress.

“All right,” you say, “so it’s worth what someone will pay for it. Thanks a lot! Now can you do me a favor and provide a little bit more guidance?”

Absolutely! It’s good to remember the basic principle above, though, given that it is ultimately true in every situation. We’ll provide you a number of guiding valuation principles, but any buyer can say at any time, “All those principles are fine, but X is what it is worth to me and X is all I’ll pay.”

In the next several postings, I’ll address basic terminology, the importance of the market, the relevance of public market valuations, asset valuations, EBITDA multiples, recurring revenue multiples, comparable company valuation, the role of growth, the type of buyer for your company, asset vs. stock sales, and whether you should expect to get the value of your company at closing.

GROW and SELL Advisors, wholly-owned by Traversi & Co., LLC, is a premier sell-side M&A advisory firm – a boutique investment bank – serving the lower middle market.  Visit us here.

For a short video clip on this topic, click here.