A Basic Guide for Valuing a Company
Chapter One
Setting the Stage ... This
Business of Valuing Small,
Closely Held Companies
Mary said to me, "I got a deal! I bought 'X' and I paid 'Y' dollars for it!"
My perception of her deal compelled me to say, "You paid what?!" As you
already know, each person's observation of the same event can normally
be counted upon to be quite different. This, of course, is true about value
in small companies.
We must let go of old assumptions that we know how things work
regarding price and value in small, closely held companies. We really don't.
For one thing, the earmarks of entrepreneurs are their independence and
nonconformance with traditional practices. Quite frequently, they will be
found never agreeing on anything from the past. For another, they are
not bound by the decisions passed down by a corporate board of directors.
The model definition of fair market value used by most professional
appraisers tends to revolve ar ... read full excerpt from A Basic Guide for Valuing a Company ebook
