Business Ownership & Acquisitions
Understanding Business Value and Buyer Due Diligence
The factors buyers commonly weigh when valuing a privately held business, and what due diligence usually covers.
What tends to influence value
Consistency of earnings, customer concentration, the depth of the management team, condition of equipment and facilities, and how dependent the business is on its owner all shape what a buyer is willing to pay. Value is ultimately agreed between buyer and seller; there is no single correct number.
What due diligence covers
Buyers typically confirm financial results, review contracts and customer relationships, inspect facilities and equipment, and examine legal, tax, employment and environmental matters. The purpose is to confirm that the business is what both sides believe it to be.
This article is general information, not legal, tax or financial advice.
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