September 2018
Beginner to intermediate
368 pages
9h 12m
English
Content preview from Mergers & Acquisitions For Dummies
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Chapter 12
Crunching the Numbers: Establishing Valuation and Selling Price
IN THIS CHAPTER
Looking at a company’s value
Settling on an asking price
Addressing differences in valuation
Considering renegotiation
Unlocking the mysteries of how to know what to pay for a company was one of the reasons I became interested in entrepreneurship. Valuation is at the core of mergers and acquisitions. After all, if both sides can’t agree to price, no deal happens.
In this chapter, I introduce you to the concept of valuation: how to determine it, why it’s important, why Buyers pay what they pay, and how Sellers can create a more compelling valuation.
What’s a Company Worth? Determining Valuation
Valuation (the price one party will pay another for a business) is based on what you can negotiate. That’s why I include some negotiating thoughts in Chapter 11. And, as with most negotiations, valuation is more art than science. In fact, I call it alchemy because valuation is often subjectivity masquerading as science and logic.
Valuation is really the intersection of cash flow and time. In other ...
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.