World Class Mergers & Acquisitions  |  For Companies $5 Million to $250 Million in Revenue

Continued Which Standard of Value Should You Use when Selling Your Business

The definition of fair market value adopted by the professional appraisal community has as its foundation IRS Revenue Ruling 59-60, and is published by the American Society of Appraisers as: “The amount at which property would change hands between a willing seller and a willing buyer when neither is acting under compulsion and when both have reasonable knowledge of the relevant facts.”  NOTE 1: The “amount” is always assumed to be cash without terms. Adjustments must be made for the value if terms are involved.

Investment Value on the other hand, represents the value to one particular interested buyer or investor.   It is generally higher than fair market value.   RATIONALE:  The buyer presumably has specific reasons for acquiring the property that motivate him to pay a premium over fair market value.

Our goal when representing the seller is to find that particular interested buyer who might be willing to pay a reasonable premium over fair market value.

If you know of a business owner who’s thinking of selling or buying a business and who might benefit from a complimentary consultation with us, have them contact me, or any of the M&A professionals at

By: Mike Ertel, Transworld M&A Advisors