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Successful Acquisitions by David Braun

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VALUE VS. PRICE

In the context of acquisitions, any discussion of valuation has to begin with the understanding that valuation and price have different meanings and are (usually) two quite different numbers. A company’s valuation is the financial assessment of a business determined by one or more accepted methods of calculation. Its main purpose is to establish an indication of what you should pay for the prospect. The price is the dollar amount that will be negotiated in the acquisition agreement.

Remember the core premise of our Roadmap approach to acquisition: Every company is for sale for the right equation. The valuation certainly forms a major part of that equation, but there is no reason to assume it will be all of it. One of the factors ...

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