How To Value a Business Purchase
There is no one objective value for a business. The asking price is merely someone’s opinion of value and can vary a great deal, depending on the level of sophistication of the seller and the seller’s advisors. Most businesses have a price tag, but this can be a price range and there is always room for negotiation.
It’s more important for you to determine how much the business is worth to you, based on your own requirements and with the help of your financial advisors. If your valuation and the seller’s valuation are reasonably close, you can start thinking about taking the next step. Otherwise, you’re probably not going to be successful. The seller has certain expectations and, if you’re worlds apart, it’s unlikely the deal will get done.
How much you offer depends on the value you see in the business as well as what you think the seller will accept. If you sense that the seller would like to get out quickly, you may be able to offer a lower price and agree that the seller can leave immediately and see your offer accepted before a higher one. This, of course, is always a judgment call.
Your business valuation Calgary expert will help you decide the right amount to offer.