Russel Cohen

Russell Cohen

Russell Cohen
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Palm Beach Business Brokers Discuss Book Value Vs Fair Market Value

April 2012

Selling a business is by no means an easy or straight forward task. It’s always in the best interest of each party to look out for their own bottom line which, of course, in a business negotiation is at direct odds with the bottom line of the other party. When selling your business it’s often wise to utilize the skills of business brokers to make sure you’re getting the best valuation for your assets possible. Here we’ll discuss the difference between Book Value as it compares to Fair Market Value and how you can get the most out of business brokers to know the difference as it relates to your situation.

What is Business Book Value?

Book Value is exactly what it sounds like; the value your business shows on its books and business brokers can further explain it if needed. It’s typically how much money your business makes minus how much money it costs to make it. Book Value does take into account depreciation of a business’s assets but not really most other intangible factors.

What is Fair Market Value?

Fair Market Value is the value of your business after you’ve accounted for all of the other factors that strict book value doesn’t look for. What is the business need for the service you provide going to look like in the future? Are there 5 other businesses for sale within 50 miles that have a very similar service or product? None of that’s figured into your book value, but it’s remarkably important to Fair Market Value.

How Do The Two Interact?

In a typical business sale a strict reliance on Book Value is often disadvantageous for the seller rather than the buyer. This is due to the fact that Fair Market Value tends to be higher than Book Value given the way that they’re calculated. It’s important to leverage the expertise of business brokers native to the Palm Beach area to make sure you’re valuing your business correctly for sale.

How Do Business Brokers Fit In?

People aren’t going to beat down your door just because you decided to list your business for sale, nor are they going to offer you the best price for what you’ve got to offer. It’s important to find industry professionals who will not only help you value your sale properly but also who will get your business in front of as many potential buyers as possible.

For additional information or to contact us click on Palm Beach Business brokers

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  • Russel Cohen
  • Russel Cohen
  • Russel Cohen
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