IBA's Pricing a Small Business for Sale Bridges Theoretical FMV & Real World of Sales

PLANTATION, FLORIDA – JANUARY 4, 2010 – The Institute of Business Appraisers (IBA), the oldest professional society devoted solely to the appraisal of closely held businesses, today announced its publication of Pricing a Small Business for Sale:  A Practical Guide for Business Owners, Business Brokers, Buyers, and Their Advisors, by Toby Tatum, MBA, CBA.  

Mr. Tatum explains why the marketplace for small businesses—where over 90% of individuals seeking to buy a small business never succeed in their effort—is one of the most inefficient markets in existence.  In an overwhelming majority of cases, buyers and sellers bring entirely different perspectives about business value to the bargaining table.  The real world reasons behind these issues should be understood and incorporated by business appraisers.

Mr. Tatum explains why appraisers need to understand the significantly different perspectives and expectations that business owners and potential buyers bring to a sales negotiation.  

In Tatum’s own words:

In recent years, I’ve come across professional appraisals provided business sellers and buyers as pricing guidance that were entirely unrealistic.  The problem lies in the fact that a “fair market value” opinion, which many appraisers tend to rely on when valuing a business, is a model designed for equity transactions, which doesn’t match the way small businesses actually change hands in the real world.  

Most small business sales are advertised, negotiated and ultimately transacted as asset sales, not equity sales. Understanding what this means, and how it works, makes a huge difference in determining a price for a small business that will actually satisfy both buyer and seller.  Moreover, many, many small business sales involve seller financing, and that factor, too, heavily affects appropriate value.  

Using the insight gained from being a business broker, a business broker trainer, and a Certified Business Appraiser (CBA), Tatum shows the appraiser how to use the real world of actual sales to improve equity valuations.

Consider what some of the industry’s most experienced and well-regarded figures have to say about the significance of Tatum’s accomplishment in this book:

“I thought I knew everything about business valuation until I read Toby Tatum’s newest book. This will now set the standard for anyone interested in estimating the true value of a business.”

—Len Krick, MBA, SBA, CMEA

Certified Business Intermediary

Merger and Acquisition Master Intermediary

Managing Member and Principal Broker

United Business Brokers of Nevada, LLC

 

“Mr. Tatum’s book represents a significant contribution to the theory and practice of pricing small businesses for sale. This book should be of interest to any serious would-be seller or buyer of a closely held business. It should be of special interest to business brokers and to business appraisers who attempt to value small businesses.”

                                —Raymond C. Miles, FIBA, MCBA, FIBBA, MS

Founder and former Executive Director of the Institute of Business Appraisers

 

“The vast majority of small businesses offered for sale are never sold. The primary reason being the business is overpriced. If business brokers, business buyers, and sellers apply the information provided in this book, they will be 80 percent of the way to the successful purchase or transfer of a small business.”

 

—Donna S. Dailey, M.Ed., LRED, CBI, SBA

Founder and President

School of Business Brokerage, Greensboro, NC

 

You can buy this book by acclaimed author Tatum (Anatomy of a Business Purchase Offer, Transaction Patterns: Obtaining Maximum Knowledge from BIZCOMPS® Database) for just $79 by calling  the IBA at (800) 299-4130, or from the IBA website (www.go-iba.org), where you’ll also find a wealth of additional IBA resources including information on the IBA transaction database (the largest database of private business sales available), educational tutorials, sample business appraisal reports, research libraries (with custom research options), newsletter subscriptions, and a library of white papers.

 

About IBA:

The Institute of Business Appraisers is the oldest professional society devoted solely to the appraisal of closely held businesses.  Established in 1978, the Institute was the original pioneer in business appraisal education and professional accreditation.  The Institute of Business Appraisers is committed to providing the highest quality of service to our members to assist them in a journey to professional excellence in the field of business appraisal. IBA’s goal is to provide a supportive and nurturing environment for each member through IBA’s resources including technical support, market data, professional certification and practical education in all aspects of appraisal of small and mid-size businesses. In fulfilling this mission, IBA Headquarters staff is assisted by the generosity of the many volunteers who provide professional mentoring, report review, instruction and technical publications for the enhancement of the profession. Visit www.go-iba.org