{"id":544250,"date":"2018-11-05T21:43:10","date_gmt":"2018-11-06T02:43:10","guid":{"rendered":"https:\/\/mabusinessadvisors.com\/orangecounty\/blog\/2018\/11\/05\/are-you-asking-a-reasonable-price-for-your-privately-held-company\/"},"modified":"2018-11-05T21:43:10","modified_gmt":"2018-11-06T02:43:10","slug":"are-you-asking-a-reasonable-price-for-your-privately-held-company","status":"publish","type":"post","link":"https:\/\/mabusinessadvisors.com\/orangecounty\/blog\/2018\/11\/05\/are-you-asking-a-reasonable-price-for-your-privately-held-company\/","title":{"rendered":"Are You Asking a Reasonable Price for Your Privately Held Company?"},"content":{"rendered":"<div>\n<p>Placing a price on a privately-held company is usually more complex than placing a value, or a price, on a publicly-held company.\u00a0 There are many reasons for this fact, but one of the top reasons is that privately-held companies don\u2019t have audited financial statements.<\/p>\n<p>Why are Audited Financial Statements Lacking in Privately-Held Companies?<\/p>\n<p>Preparing an audited financial statement is expensive and, as a result, many privately-held companies that have not gone public simply forego the expense.\u00a0Most privately-held companies are also not accountable to bankers, investors or partners so there is no need to incur this cost.<\/p>\n<p>Compared to a privately-held company, a publicly held company can often seem like an \u201copen book.\u201d\u00a0 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.<\/p>\n<p>What Can You Do to Overcome this Factor?<\/p>\n<p>You, as the seller, can help streamline this process.\u00a0 By having as much information available as possible and having your accountant make sure that your numbers are presented in a manner that is easy to understand and follow, you will increase your chances of selling your business for the highest value.<\/p>\n<p>Experts agree that there are several steps a seller of a privately-held company can take when he or she is establishing a price or a value.\u00a0 First, use an outside appraiser or a Business Broker\/Advisor to determine a value.\u00a0 Next, establish what your \u201cgo-to-market\u201d price is.\u00a0 Third, know your \u201cwish price.\u201d\u00a0 A seller\u2019s \u201cwish price\u201d is the price that he or she would ideally like to see.\u00a0 Finally, it is critical that sellers establish the lowest price that they are willing to take.\u00a0 You should know in advance how much you are willing to sell for as this can help a negotiation move along.<\/p>\n<p>The Marketplace Will Ultimately Decide<\/p>\n<p>It is common that the final sale price for the company be somewhere between the asking price and the bottom-dollar price established in advance by the seller.\u00a0 Yet, it is important to note, that on occasion a selling price may, in fact, be lower than any of the four we\u2019ve outlined above.\u00a0 At the end of the day, the undeniable fact, is that the marketplace will establish or determine the final selling price.<\/p>\n<p>Here are a few of the areas that you can expect a buyer to review when establishing the price that he or she is willing to pay: stability of the market and stability of earnings, the potential of the market, product diversity, the size of the customer base, the number and seriousness of competitive threats, how broad the customer base is, the relationship with suppliers, the distribution network in place, needs for capital expenditures, terms of the sale and other factors.\u00a0 The more favorable each of these points are, the more likely it is you\u2019ll receive a higher value. Contact one of our M&#038;A Advisors to discuss this further and how we may assist you in the sale of your business.<\/p>\n<p>Poznyakov\/BigStock.com<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Placing a price on a privately-held company is usually more complex than placing a value, or a price, on a publicly-held company.\u00a0 There are many reasons for this fact, but one of the top reasons is that privately-held companies don\u2019t have audited financial statements. Why are Audited Financial Statements Lacking in Privately-Held Companies? Preparing an [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":544251,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[97,98,9,96],"tags":[],"class_list":["post-544250","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-broker","category-ma-advisors","category-seller-articles","category-selling-a-business","entry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Are You Asking a Reasonable Price for Your Privately Held Company? - Orange County - M&amp;A Business Advisors<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mabusinessadvisors.com\/orangecounty\/blog\/2018\/11\/05\/are-you-asking-a-reasonable-price-for-your-privately-held-company\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Are You Asking a Reasonable Price for Your Privately Held Company? - Orange County - M&amp;A Business Advisors\" \/>\n<meta property=\"og:description\" content=\"Placing a price on a privately-held company is usually more complex than placing a value, or a price, on a publicly-held company.\u00a0 There are many reasons for this fact, but one of the top reasons is that privately-held companies don\u2019t have audited financial statements. 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