Note: these are extreme cases of undervaluing or not seeing the potential:
In 1998, Yahoo had been offered to buy newcomer Google for $1 million, but Yahoo rejected it. Again offered to Yahoo in 2002 for $5 billion and they rejected it again. Fast forward to today, Google is worth $1 trillion.
Yahoo also offered to buy FB in 2006 for $1 billion, turned down by Mark Zuckerberg, and now the market cap of Meta is at $1.4 trillion.
The blunders of Yahoo all point to not being able to see the future, according to Peter Thiel, a venture capitalist.
While these are the most popular cases, this points out that the valuation of a business is not just about current revenues but seeing a market trend and potential – which is why when considering selling your business, especially a tech business, you need the valuation of M&A experts.
A knowledgeable and experienced M&A firm not only helps business owners in evaluating the real value of their business but also helps them in getting reliable buyers for their business. Here are the different ways these M&A firms adapt to find the right value of business.
1) Asset Approach
Through asset approach, M&A firms determine the value of the business by adding the sum of its many parts. Right from infrastructure to customer base, they take every little detail into account to find the real worth of the business.
2) Income Approach
It is one of the widely utilized approaches for finding the right value of the business. Through this approach, M&A firms determine the value by calculating the overall present value of the benefits generated by the business.
3) Market Approach
It is basically an approach in which the business value is determined by comparing the exact value of the business before sale to others in the same industry. Entrepreneurs who are ready to put their business for sale can follow this approach for finding exact value of their business.
Those seeking a reliable M&A firm for selling their business can count on ValleyBiggs for their needs.
ValleyBiggs is one of the most sought after M&A firms in the nation that offers world class services of buying and selling businesses. They have been in this profession for years and till date have assisted a huge number of business owners in their buying and selling process.
The wide array of services they offer include Business Valuations, Tax & Succession Planning, Exit Consultations, Business Financing and Tech Sales & Divestitures. So get in touch with ValleyBiggs today and sell your business at its best value .