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Home > Tools and Resources > Selling a Business > Common Valuation Mistakes

Common Valuation Mistakes

By The BizQuest Staff
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Although rules of thumb can indicate a general range of value for your business, the results should be viewed with a degree of caution. There are a large number of additional factors which impact the value of a business.

For example, the profitability of privately held businesses is often minimized to reduce tax liabilities. This may understate the initial value indication. In addition, rules of thumb are difficult to apply for growing businesses, because the financial picture is changing constantly. Other considerations include regional factors, market value of assets, competition, and intangible assets.

Without thorough consideration of all factors, buyers and sellers alike are at risk of failing to maximize the potential of the sale or purchase of a business. We have listed a few of the more common factors that can easily be overlooked. We strongly encourage anyone interested in embarking on an M&A transaction to seek expert advice.

Factors that can affect the value of a privately held business:

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