What are the Types and Sizes of Businesses

The rules that govern the sale of public companies like Ford, Microsoft, or General Electric are radically different from the rules that control the sale of privately-held companies. Successful business sales are dependent upon managed expectations for both the buyer and seller. This brief overview is designed to help you understand the rules that control the purchase of the three major categories of businesses.

VR has been supplying Valued Representation to privately held businesses since 1979. Our international organization takes pride in affording to these firms the Valued Representation typically available to Wall Street companies, but impossible to obtain as a private enterprise.

VR Has Sold More Businesses In The World Than Anyone.®

We have broadly summarized the market categories and business types below. Your VR professional intermediary can explain how this applies to you and your transaction in detail.

Business and Industry Types

Most businesses are grouped into broad industry categories such as retail, manufacturing, distribution, services and construction. Within each category there are dozens of subcategories which more specifically describe the business and its market. Businesses are also grouped into market categories based on the size of the company.

Market and Transaction Categories

Publicly Traded & Large Businesses

These are the publicly-traded companies traded on stock exchanges around the world and large businesses held by institutional investors. The rules of their acquisition are taught in business schools, and their mergers and acquisitions are typically handled by investment banking firms. These companies have the objective of maximizing shareholders value.

Mid-Market Companies

These range from substantial privately-held companies with earnings from the several hundreds of thousands of dollars to earnings in the millions of dollars. Comparisons to publicly-traded companies and large businesses for sales purposes, however, are misleading. Private companies do not actively trade their stock; consequently there is little if any liquidity to their stock which factors into the market value of the business.

Small Businesses

These businesses may vary from situations where the owners play the central management and employee roles, to companies that demonstrate consistency in earnings and have solid organizational structures. In most small businesses, owner involvement in the day-to-day management is typical. Small businesses are the backbone of the American economy and the marketplace for their sale is active. The greatest obstacle to the successful sale of these businesses is overcoming the buyer's perception of risk.