“how To buy a business “& “how to sell a business”-“business valuations" and
"business appraisals"
“how to buy a business“ & “how to sell a business”-“business valuations" and "business
appraisals"
What is a “business valuation”?
A business valuation is a complicated and complex set of rigorous research and data crunching
processes used to very accurately “appraise a business” or “value a company” and it owners
interests and assets in the business. A business valuation is used to properly and legally appraise
and estimate a business very accurately ,which in turn, is used as a gauge and determining factor
in any “business buying” or “business selling” deal. These business valuation and business
appraisal reports let also are used for numerous other purposes other than buying or selling a
business, Sometimes business appraisers are hired for other purposes whom then use these
business valuation reports for a myriad of obvious legal issues, tax issues, adding a partner to the
corporation, selling of a partners ownership stake in the corporation, business loans, and a
number of other legal and business uses.
When valuing a business, the first steps in this complex and time consuming process, you must
first determine the definitive reason(s) for the actual business valuation. This part of the process
is what is defined as the “business value standard” and the “premise of value”. The “business
value standard” can be best explained as the terms or conditions of the business to be appraised
and valued. The “premise of value” can best be described as the “more than likely” outcome of
the business in the near future or the valuing of a business by means of calculating the market
value for ALL assets minus all related debt.
“Business valuations” are perhaps one of the most important aspects of any business buying or
selling opportunity, due to this sole fact, both parties of the deal should each seek out their own
“business valuation” in order for the deal to go much more smoothly and efficiently.
Determining the fair market value of the business brokering deal at hand will help both sides
achieve a common negotiating ground while uncovering all future possibilities and capabilities
of the actual business at hand.
Now keep in mind that when buying or selling a business, the business valuation and due
diligence processes should never be rushed through or expedited, as rushing to get through these
processes will make your success rates drop dramatically. Another important piece of
information to consider when buying or selling a business, always understand that business
valuations, business appraisals, and due diligence are all geared towards collecting research,
collecting data, and crunching numbers and variables to approximate the value of a business and
the success rate of the business as well.
A “business valuation” goes hand–in-hand with the “due diligence” processes of a business
buying or selling venture. These critical and very important processes include but are not limited
to economic conditions, location of business, financial analysis, normalization of financial
statements, income; asset; market approaches, discount or capitalization rates, capital asset
pricing model, weighted average cost of capital, build up methods, asset based approaches,

market approaches, guideline public company method, transaction method or direct market data
method, discounts and premiums, discount for lack of control, discounts for lack of
marketability, in depth restricted stock studies, option pricing, pre IPO studies, applying the
research and data, and last but not least-compiling and crunching all the numbers, data, variables.
This is just the beginning…
As you can see, proper and thorough preparation, research, learning, and practicing both sides of
the proposed business venture at hand is by far the best route to take. You will ultimately end up
saving yourself lots of time, effort, stress, aggravation, and most importantly money.
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Businessbrokers
how to by a business
How to sell a business
buy a business