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Whatever formula you use to calculate the market value of a business--assets, performance or other multiples--a good starting point may be all it provides. Here's why--along with the other factors that count.
Valuation may be done for a wide range of reasons and is not an exact science, whatever method you use. To understand how a company's fair market value is reached, start here.
The founder of a software development business had already agreed to be acquired by one company and was ready to sign the documents. Then another company came calling with a better offer. Loyal employees and a working partnership with the buyer turned out to be the crucial assets constituting the value of the business. The author concludes that you need to shop around and negotiate to find out what your company is really worth.
Any entrepreneur who hopes to raise capital from individual investors, so-called "angels," should be properly prepared with a presentation, business plan, list of potential angels, and outline of the opportunity his or her new venture affords. The author explains that it's also important to avoid making such mistakes as allowing investors to have too large a stake in the enterprise. That could cause problems should the company fail, he writes, in an article filled with specific tips for dealing with these financiers.
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