Price or Value: Which is Correct?

June 6, 2016 by Yeo & Yeo

When a business is sold, it often sells for more (or less) than the appraised value. This may come as a surprise to laypeople, but valuators understand that there are many valid reasons that "price" and "value" may differ. Businesses that understand this subtlety are better positioned to make informed decisions.

Price vs. Value

Price is specific to an individual buyer and seller. It's the amount of cash (or its equivalent) for which anything is bought, sold or offered for sale. It requires an offer to sell, an acceptance of that offer and an exchange of money (or other property). Some strategic or financial buyers may be willing to pay more than others because...

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Value Your Business Internally and Externally When Planning Your Succession or Estate Plan

February 25, 2016 by Yeo & Yeo

While preparing your succession or estate plan, it can be helpful to value your family business both internally and externally.

You might wonder what that means — because you think your company has just one value. In fact, it can have multiple values depending on the valuation standard used. The different results can help you determine whether to keep the family business, pass it on to the next generation or sell it to an outsider.

Two common standards used in valuing a family business are:

1. Investment value. This gauges internal value, which represents the value to a particular investor based on individual investment requirements and expectations. In layman's terms, it is what the business is worth to the...

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