A key element in buying or selling a business is that there’s only one chance to do it right! If the buyer pays too much or the seller asks too little, the ability to recoup the difference is gone forever. Understanding value in entering a transaction to merge, acquire or dispose of a business or a business interest is critical to the success of the transaction.
In addition to the various complexities related to a non-acquisition valuation, a transaction often presupposes an “investment or strategic” standard of value which must consider acquiror synergistic advantages. Such advantages can, and should, influence transaction pricing. Another critical aspect that will influence transaction pricing is the tax structure. Whether the transaction is a stock purchase or an asset purchase or any number of possible variations, influences transaction pricing greatly.
In the 1990s, value multiples of 6 to 12 times EBITDA (earnings before interest, taxes, depreciation and amortization) were common. Unfortunately, the poor performance of the public stock markets in recent years is in large part due to inflated purchase prices during that period.
Our professionals have extensive experience in this area. Each of the Group’s members also has expertise in corporate and business tax matters, including acquisitions, dispositions and mergers. This experience allows for careful consideration of appropriate tax structures and the influence of each on the pricing of the deal.
When a purchase or sale is being contemplated, it as absolutely necessary to understand the value of a business. Don’t find yourself paying too much or selling for too little. Call our Business Valuation Services Group first to help you understand the value of your subject company and how to structure the best deal.