When you are selling your company, the marketplace determines the true value of your business. Business Valuations provided by business brokers and consultants as a rule, they are academic exercises that are out of date the day they are produced. Valuations can be useful when one needs an objective appraisal of what a business is worth at a specific point in time, one that can stand up in a court of law. Examples would be estate planning purposes or forced redistribution of assets due to divorce. But otherwise valuations are not worth the $30,000 to $50,000 a business owner pays.
Why? Shifts in market, economics, and competitive landscapes make valuations obsolete. Additionally, your business will be worth more to the right acquirer or acquirers. If you identify several acquirers that can benefit by adding your product lines, client base or plant locations, you drive your price higher.
For business owners seriously considering the sale of their life’s work, time and money is wasted by buying a valuation. An estimated range that is based on research and confidential discussions with acquirers that are looking for companies like yours should be made a part of the M&A process, rather than an expensive precursor to it.
