A Leading Small Business Brokerage Website Report Essay example

1041 Words Nov 21st, 2016 5 Pages
A leading small business brokerage website reports the highest transaction volume since 2008, with over 2,000 United States enterprises transferring ownership each fiscal quarter in 2016. [1] Each transaction ranges from $200 to $500 thousand dollars. Large- to medium-sized firms sold and brought elsewhere command considerably more. Before an ownership transfer takes place, buyers and sellers must know what a company is worth before issuing a selling price or making an offer. To determine an enterprise’s value, a business appraiser uses one of several models to evaluate factors, such as a company’s financial history and assets. The models range from complex analyses to simplistic valuations based on similar transactions.

How Buyers and Sellers Valuate Companies

When buying or selling a business, it is important to know what the enterprise is worth. [2] Depending on the business type, professional appraisers use one of several valuation models, which include but are not limited to:

Asset valuation
Comparable worth
Excess earning
Financial performance
Future earnings
Market valuation

Buyers and sellers should take several steps before proceeding with an ownership transfer. Both parties should have a clear understanding of a company’s financial statements and growth prospects. An independent accountant for the buyer should prepare a financial report detailing corporate performance under the new owner considering factors such as tangible and intangible asset values.…

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