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| Thursday, September 09, 2010
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Price vs. Value |
A common misconception is that a business’ price is the same as its value. This is not always true. Price can be determined by many factors including deal terms, buyer perception, etc. There are many types of value as well, including fair market value, fair value and value to the buyer. Price can be skewed up by favorable deal terms such as long term financing, low or no interest rate on seller notes, earnouts, and stock vs. cash. Price can be skewed down by unfavorable deal terms such as an all cash transaction with no seller financing.
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