Developing the potential of a business takes time, effort and resources. If you're thinking of buying a company, be aware that the asking price is based on annual sales and other factors based on existing conditions. 


Evaluating the true value of a company is a complicated process that includes adapting statements to reflect economic reality and adjusting some transactions to market conditions.  

Sellers are eager to point out that their businesses have tremendous "potential." Even if it's true, a buyer should never pay for it. The reason: Potential takes time, effort and resources to develop. If a buyer pays for potential upfront, then makes the effort and investment to develop it, the buyer has paid for it twice.

Contact us to set up an appointment with our business valuation experts. If you're interested in buying a company, we can help ensure the price is based on reality - so you don't pay too much.

© Bizactions LLC.