How To Get a Fair Market Value For Your Business

The fair market value of your business, as the term would imply, is the price that your business would be likely to sell for on the open market as it stands. Of course, the fact of the matter is that we are not talking about a consumer item, where the fairmarket value is a hard and fast, defined figure. There are intricacies and individualities associated with each business, to the point where two similar companies of the same size in the same area might have very different values. So how can you get a fair market value for your business?

Use an outside M & A expert

There are two key reasons why you should use external mergers and acquisitions consultants with expertise and experience to value your business:

1.They remove the emotional factor. This is important because you as the seller of the business will typically have a high emotional attachment to the company, and thus will minimize liabilities and exaggerate assets (this is often a subconscious action) and then set yourself an unreasonable expectationof the value of your business.

2. They will look at every single aspect of your business. It can be easy for you to overlook something that has an effect on your business valuation –you have probably considered your chief assets (property, essential equipment, etc), but have you thought about the value of the warranty periods left on that equipment? What about your supplier relationships –if a contract runs out soon, then it has less value than one that is set for longer timeframes.

Prepare your books

Your financial reporting, each and every contract, your tax filings –every piece of documentation related to your business will be scrutinized during the buy-side due diligence process. Get ahead of this by getting everything in order now, and arrange all ofyour documents in one place where they are available for analysis.

Assess the market

For the majority of small businesses, the market value will be defined in part by the state of the market itself –i.e. the price that comparable businesses have sold for recently. The issue with this is that these figures are not always readily available to the general public, so you will need to speak with a mergers and acquisitions consultancy, and not just any, but one that specializes in (or at least has significant experience dealing with) your specific industry and sector.

Pinnacle Pharmacy Group

At Pinnacle Pharmacy Group we work in the pharmacy business and digital health sectors –and only in these sectors. This focus gives us a unique knowledge of the industry and allows us to provide a range of expert M&A services to help you navigate the transaction process, on both the buy and sell sides.

 Tags Digital Health, M&A, Pharmacy