Putting a price on privately-held companies is more complicated\u00a0than placing a value or price on a publicly-held one. For one\u00a0thing, many privately-held businesses do not have audited\u00a0financial statements; these statements are very expensive and\u00a0not required. Public companies also have to reveal a lot more\u00a0about their financial issues and other information than the\u00a0privately-held ones. This makes digging out information for a\u00a0privately-held company difficult for a prospective purchaser. So, a\u00a0seller should gather as much information as possible, and have\u00a0their accountant put the numbers in a usable format if they are\u00a0not already.<\/p>\n
Another expert has said that when the seller of a privately-held\u00a0company decides to sell, there are four estimates of price or\u00a0value:<\/p>\n
The selling price is usually somewhere between the asking price\u00a0and the bottom-dollar price set by the seller. However, sometimes\u00a0it is less than all four estimates mentioned above. The ultimate\u00a0selling price is set by the marketplace, which is usually governed\u00a0by how badly the seller wants to sell and how badly the buyer\u00a0wants to buy.<\/p>\n
What can a buyer review in assessing the price he or she is\u00a0willing to pay? The seller should have answers available for\u00a0all of the pertinent items on the following checklist. The more\u00a0favorable each item is, the higher the price.<\/p>\n
There may be some additional factors to consider, but this is the\u00a0type of analysis a buyer should perform. The better the answers\u00a0to the above benchmarks, the more likely it is that a seller will\u00a0receive a price between the market value and the \u201cwish\u201d price.<\/p>\n