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Is your firm an investment value candidate? If you’re looking to sell, this is the level of value at which you have the most opportunity to maximize your exit. Investment value
I n the world of business valuation, we throw around a lot of terminology relating to value indications. You are probably most familiar with fair market value, but I would like to discuss a different value level today. The International Glossary of Business Valuation Terms defines investment value as the value to a particular investor based on individual investment requirements and expectations. As a shareholder, this is the level of value at which you have the most opportunity to maximize your business investment.
Tracey Eaves
Investment value involves synergies between firms and the additional value over and above fair market value. Synergies come in various forms including the ability to increase the revenues of the target firm, the reduction of risk when combined with an acquirer, savings through the elimination of duplicated efforts, and other qualitative factors including an increase in depth of management, enhanced financial performance, and diversification. Firm size will also likely drive investment value. Supply and demand can lead to additional price premiums when the number of buyers exceeds the number of good firms for sale.
appealing option to exit a firm. However, not every firm is a candidate. Investment value candidates will likely have a mix of the following characteristics: ❚ ❚ The firm operates in an attractive target market ❚ ❚ The talent of the people on staff must be attractive to a buyer ❚ ❚ Specialties and niche markets are generally sought after by investment buyers ❚ ❚ Financial and organizational performance should be strong
See TRACEY EAVES, page 4
As a seller, investment value is certainly an
THE ZWEIG LETTER April 22, 2019, ISSUE 1293
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