28 must-dos in determining the fair market price of a small business

Posted by SamuelMo under Startups
From https://www.linkedin.com 3220 days ago
Made Hot by: mikehartman1 on June 28, 2015 10:41 am

When you wish to buy a business you need to do a valuation of the same in order to arrive at a monetary value that you'll compare against the seller's price during negotiations. This monetary value is referred to as the fair market price. Here's how you determine it...

Who Voted for this Story

Top BizSugar Users

This week's most active BizSugar users. Join Them!

Comments

Written by AngelBiz
3216 days ago

Excellent article and very detailed list indeed. In my experience buying or selling a business is a long and cumbersome process. The list of actions you have provided gives and excellent framework to work with and drive the sale to completion.

- 0 +

Written by SamuelMo
3216 days ago

Hi Harry, Thanks for the compliments. I agree; these are very involving processes seeing as there's so much to consider. I indeed hope that this framework will help prospective business buyers to further learn about what each of the 28 steps involve.

- 0 +

Written by lyceum
3216 days ago

Samuel: You are welcome! :) I have to go through your long list again and come back to you! ;) In a philosophical meaning, the price for a small business will always be fair in the true sense. It is a matter of supply and demand.

- 0 +

Written by lyceum
3217 days ago

Samuel: Welcome to BizSugar! Which elements are the most important of the 28, do you think?

- 0 +

Written by SamuelMo
3217 days ago

Hi Martin. Thanks for the welcome, vote and comment. Well, no.5 about consulting a broker, accountant and attorney is absolutely vital. They'll be your 'CSI' team - they know what to look for. Next, no.7-14, i.e. everything that the accountant will do; this will basically determine the fair market price. Next, no.15-22, where the entrepreneur's business savvy will help to create an informed opinion about the business in question, and consequently help to guide operations after the business is acquired. That's how I see it...what about you?

- 0 +