Sell Your Business for an Outrageous Price

Introduction

For years, I’ve been preoccupied by a nagging question: Why do similar companies sell at wildly divergent prices? While I admit that this question does not rank with What is the meaning of life? or What goes on in the teenage brain?, like those questions, it has given me its share of sleepless nights. Unlike those two profound questions, however, my ultimate question is one that I had hope I might one day be able to answer.

When I started my career as an investment adviser, I bought companies as investment vehicles for clients. I would analyze both the current and the potential value of companies using every available financial measure. If, for example, Acme Company and Beta Company were of similar value, they’d sell at roughly equivalent ...