Placing a price on a privately-held company is usually more complex than placing a value, or a price, on a publicly-held company. There are many reasons for this fact, but one of the top reasons is that privately-held companies don’t have audited financial statements. Why are Audited Financial Statements Lacking in Privately-Held Companies? Preparing an audited financial statement is expensive and, as a result, many privately-held companies that have not gone public simply forego the expense. Most privately-held companies are also not accountable to bankers, investors or partners so there is no need to incur this cost. Compared to a privately-held company, a publicly held company can often seem like an “open book.” Buyers are left with the proposition of having to dig out a lot more information from a privately-held company in order to assess whether or not a valuation or price is accurate. What Can You Do to Overcome this Factor? You, as the seller, can help streamline this … [Read more...]
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