It is important to distinguish a formal business valuation from business pricing, known as a Market Opinion.
A Market Opinion is a broker’s opinion of what a business may sell for, based upon his/her personal analysis, industry expertise, knowledge of local markets and lending, and comparable past sales. While it is not a formal business valuation, an experienced business broker should be able to deliver a Market Opinion and articulate a realistic Most Probable Sales Price (MPSP) range.
The Market Opinion provides a business seller with expectations on what the business may sell for, given the intended pool of potential buyers, at that given time. For some businesses, the Market Opinion is then used to set and communicate an asking price. For large businesses, an asking price may not be advertised.
As part of the Market Opinion, the broker should also provide insights on how different deal structuring scenarios could impact the targeted sales price, and the associated tax considerations. Ideally, the broker will function as part of your overall broker team who will collectively consider the implications of different deal structures.
