Placing a value on a business is complex. However, there are still several factors to consider when pricing your company. Keep these in mind as you work through this important process.


Why are Audited Financial Statements Lacking in Privately-Held Companies?

The reason for this is simple: preparing an audited financial statement is expensive. As a result, many companies that have not gone public simply waive the expense. On the other hand, publicly held companies reveal much more information regarding their finances as well as a range of other kinds of information.

Compared to a privately-held company, a publicly held company can often seem like an “open book.” Buyers has this idea of having to dig out a lot more information from a privately-held company in order to assess whether or not a valuation is accurate.


What Can You Do to Overcome this Factor?

There are things you can do to overcome this obstacle and increase your chances of selling successfully. First, use an outside appraiser or expert to determine a value for your company. Next, establish what your “go-to-market” price is. This is the price you would ideally like to see for your business. Finally, establish the lowest price that you are willing to take. Knowing in advance how much you’re willing to sell for will help negotiations move more smoothly.


The Marketplace Will Ultimately Decide

The marketplace decides the final sale price for your company. This means that a buyer will consider a number of factors when determining the price they’re willing to pay, such as the stability of the market and earnings, the potential of the market, product diversity, and the size of the customer base. The more favorable each of these points are, the more likely it is you’ll receive a higher price. 

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