World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

Mergers & Acquisition FAQ – December 2009

Q: I am looking to have my company valued.  What is the best method available to value a company?

A: There is no one method of valuation available that trumps every other method.  Under the standards dictating the procedures used in valuation, multiple methods are used.  This tends to eliminate built in flaws in each system and using more than one method tends to compliment another.

Q: Since I have had my last valuation done, the value of my business has dropped considerably.  Why might this be?

A: This could be due to a variety of factors.  Generally, the slower economy coupled with a depreciating asset base will have a tendency to lower business values, sometimes substantially.  While closely-held businesses do not act exactly like widely held corporations on major stock exchanges, closely-held business values will fluctuate just like publically held companies.

Q: Does a diminished business value mean it is time to exit a business?

A: Absolutely not, unless exiting at this current point matches your long term interests.  Every business owner should have an exit plan consisting of when and under what circumstances they want to exit the business.  Right now, lowered business values make this an attractive time to engage in estate and succession planning.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors