Business Advisor Denver Colorado
When individuals find themselves in a position where they would like to transfer their largest asset to an insider of their company or to an outside third party, they turn to a business advisor to act as an intermediary in a buy-sell transaction.
Depending on the size of the transaction, they may choose to be represented by a Business Broker on transactions say under $2 Million, or to a Mergers and Acquisitions (M&A) Advisor for larger transactions. Wright Business Advisors specialize in selling businesses with revenues from $1 Million to $10 Million.
The International Business Brokers Association (IBBA) teaches a course on analyzing and recasting financial statements in order to determine a small business’s value. Here is their definition of cost, price, and value:
“Cost” is the amount of money, labor, or other property required to create, produce or acquire a thing. It is a “fact” or the estimate of a fact.
“Price” on the other hand, is the amount of some medium of exchange, frequently but not always money, that is needed to acquire a thing or that has been expended to acquire it. Quite simply, price is what is paid. Once stated, price is a fact, whether it is publicly disclosed or retained privately.
“Value” is that quality of a thing according to which it is thought of being more or less desirable, useful, estimable, or important. Value is an opinion, not a fact. It’s an estimate of an individual’s perception at a point in time of anticipated benefits recognizing both the risk or attainment and the time until receipt of those benefits.
Price is what is paid, value is what the individual hopes to receive.
Fair market value is the amount at which property would change hands between a willing seller and a willing buyer when neither is acting under compulsion and when both have a reasonable knowledge of the relevant facts.
Like in real estate transactions, Denver business advisors (business brokers) in addition to the income and asset approach to valuation, will use the market approach to provide an opinion of value.
While business brokers are business advisors, they serve as business intermediaries that broker smaller, privately-held business transactions to individual buyers that are looking to become entrepreneurs and acquire a business under $2 Million, M&A advisors represent the acquisition or merger (one company combining with another one) of larger, more complex business transactions.
Buyers involved in M&A transactions are typically strategic buyers that operate in an adjacent, related, or the same industry, and Private Equity (PE) firms, or Partners, which are financial buyers that have created a fund with dedicated capital to fund the acquisition.
Strategic buyers which are typically established companies in the same, similar, or synergistic industry are also involved in acquiring smaller companies owned by individuals in order to help them grow faster through acquisition as opposed to slower, organic growth.
Some sellers may not be actually selling their company but selling shares in the company in order to raise capital for its survival or growth. They issue stock in their company in order to raise capital to invest in the business.
Denver Business advisors guide sellers through the emotional process to ensure their goals of a successful close are met and enable the owner to continue to run their company throughout the process.