What is Fair Market Value anyhow?

Shaking Hands

When determining the value of a business there are many terms which can be confusing.  The term most often used if Fair Market Value and is defined as:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.  Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. The Buyer and Seller are typically willing and knowledgeable.

2. Both parties are well informed or well advised, and each acting in what they consider their own best interests.

3. A reasonable time is allowed for exposure in the open market.

4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto.

5. The price represents the normal consideration without special or creative financing or sales concessions to outside parties.

About Rick Krebs, CPA - Business Valuations, Mergers & Acquisitions

Rick Krebs - Mergers and Acquisitions Professional, Business Broker, CPA. Rick brings a unique blend of sales, entrepreneurial, and financial experience to Business Sales Group. He began his career as a CPA, working in Nevada and Utah where valuable financial experience was gained. He uses those skills every day. He graduated with a Master’s of Science Degree and Bachelor’s Degree from Utah State University. As a business owner he started Liberty Mortgage, a mortgage bank licensed in 23 states nationwide. He eventually sold the successful company to an investor from California. He has been in the M&A space helping people sell their businesses since July, 2010. During his first year as a business broker with BRC, he listed and sold more businesses than the entire office combined. As a sale-side and buy-side advisor for Mergers and Acquisitions transactions Rick's advisory, accounting, and management skills are invaluable when advising sellers as they maneuver the intricate details of the deal through closing. Rick is also a CNA (Certified Negotiation Expert) which helps him negotiate the most favorable terms for clients in a transaction. ​ Rick was quoted by FORBES as an expert sales-side advisor who helps Sellers avoid the pitfalls of selling a business.

Posted on December 1, 2017, in Company News and Announcements. Bookmark the permalink. Leave a comment.

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