Chapter 6
Explaining and Influencing Valuation
IN THIS CHAPTER
Learning what valuation really means
Comprehending various points of view on valuation
Understanding a valuation report
Getting the inside scope on what influences valuation
“Valuation is a complex mathematical formula … that largely depends on which side I’m representing.” That’s a joke I’ve used many times when delivering an M&A presentation. Beyond a bit of haughty smugness, the essence of that quote is at the heart of any transaction: Something is worth whatever people agree it's worth.
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 on a 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.
Pondering the Meaning of Valuation
Valuation is what two sides — buyer and seller, in the world ...
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