Selling a business is a complex endeavor. As advisors to
business owners and shareholders of private companies, we have
helped companies to navigate the process from beginning to end. We
are excited to share those experiences and insights in this new
series, "M&A Essentials." The series will offer a
fundamental understanding of the concepts, issues and processes
every business owner should be familiar with when considering and
conducting the sale of a business.
Today's post discusses the relationships between a
company's valuation, purchase price and the cash proceeds
received from a sale.
As shareholders consider selling a company, their primary
financial goal should be to maximize the cash they receive over
time for their investment. To estimate the cash flow of a sale
transaction it is critical to understand the fundamental elements
of valuation, including enterprise and equity values, multiples and
goodwill. In this post we will define these elements, explain
