Who Makes the Rules on Valuing Small and Lower Middle Market Deals?
Spoiler, not industry experts.
Check out this recent video I posted for more.
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by an intermediary
from Gonzaga University
in Tacoma, WA, USA
in Tacoma, WA, USA
2yrs ago
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by a professional
2yrs ago
from University of Southern California in North Palm Beach, FL, USA
from University of Southern California in North Palm Beach, FL, USA
"Banks make the rules," is what you say, and that's generally correct. And there are a lot of dumb decisions made by lenders that buyers get to pay for. Also thanks to the government agency who seems to be setting expectations: SBA. (I rarely worked for anyone buying the kinds of businesses that require SBA financing.)
Buyers decide on the pricing of businesses for sale. Quite a few buyers overpay.
What matters the most? Realism IRT net cash flow and the relationships among the C.E.L.B.S. (my acronym)
How do I know this? Because for 30 years I ran a national business appraisal practice, and I can't remember any of my valuations that were rejected by lenders. Sometimes those valuations were the irrefutable remedy when sellers questioned what a buyer wanted to pay for their company.
just saying . . .
Buyers decide on the pricing of businesses for sale. Quite a few buyers overpay.
What matters the most? Realism IRT net cash flow and the relationships among the C.E.L.B.S. (my acronym)
How do I know this? Because for 30 years I ran a national business appraisal practice, and I can't remember any of my valuations that were rejected by lenders. Sometimes those valuations were the irrefutable remedy when sellers questioned what a buyer wanted to pay for their company.
just saying . . .
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by an intermediary
2yrs ago
from Gonzaga University in Tacoma, WA, USA
from Gonzaga University in Tacoma, WA, USA
Yeah kinda. No buyer no deal right. However even with a buyer, with no money there's no deal. And most deals include debt, depending on size of deal it will on the majority be SBA. So SBA lenders control the money and therefore control deals.
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