Why Valuation Is Important During a Company Acquisition

Truforte Business Group - Brokers Blog

Are you planning to buy a Florida business? There is a lot to consider. First of all, you need to have a clear idea of ​​why you want to buy an existing business. There are plenty of reasons for this, but what do you want to achieve with this? An existing company has history, an established brand image, and a customer base. Studies show that the chance of success when buying a company without specialist support is 33%. That’s low. It is because there are a lot of pitfalls in the process of buying a company. It often happens that the business does not deliver what the entrepreneur expects. Or the run-up to the sale does not go as smoothly as hoped.

An independent valuation

The takeover of a company is always accompanied by emotions, both on the side of the seller and the buyer. Many sellers attach sentimental value to their businesses while the buyer has a certain vision of the future possibilities of the company to be purchased. Both parties translate these into different values for the business depending on their position and situation. The company value lies between these different positions.

An independent valuation of a company is, therefore, a logical part of a company takeover. In practice, a business broker will have a company valuation carried out at the start of a takeover process (purchase or sale). The valuation of the company forms a basis for price negotiations.

A company’s valuation looks to the future

The valuation of a company is always forward-looking. The value is determined by the answer to the question of how much money the company will generate in the future. Past results are no guarantee for the future but can be used to predict performance. The valuation of the company forms a basis for price negotiations. In some cases a price upon which a business sells is going to depend on the seller motivation. Knowing business worth can often be impacted by the motivation of the person selling the business.

There are different valuation methods

The valuation of a Florida business requires a specific approach depending on its size. For example, when determining the value of a listed company, the share price is a major factor. An SME company does not have a stock exchange listing and is often valued by its revenue-generating power. To learn more, or get expert help with a business valuation in Florida, get in touch with us today.

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