About two-thirds of nearly 1,000 business owners surveyed recently by Pepperdine University’s Private Capital Markets Project expect to transfer their ownership in the next 10 years. But will those owners be able to sell the fruits of their years of labor for an acceptable amount? Maybe, maybe not.
The large majority of companies in the U.S. are privately held, and valuing private companies is particularly tricky, because of the difficulty of estimating their future financial performance.
Investment bankers and business brokers in the Pepperdine survey said that about 1 in 3 of their engagements to sell companies (presumably public and private) terminated without a deal closing last year. The top reason? Investment bankers reported the cause was most often a valuation gap in pricing.
For business brokers, a valuation gap was tied for the top reason, along with what was described as unreasonable non-price demands by one of the deal parties. In fact, roughly 20 percent of the bustedRead More »from Is Your Business Worth As Much As You Think?