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Politics : Ask Michael Burke
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To: Skeeter Bug who wrote (34854)10/30/1998 8:38:00 AM
From: accountclosed  Read Replies (1) of 132070
 
Skeets:

I have another response. You gave some examples from your personal experience, I will too. I have been involved in a fair number of acquisitions of private businesses which involve valuations of bundles of various assets both tangible and intangible. Usually a seller wants to get the highest price and often seeks multiple buyers. But such is not always the case. Sometimes a buyer wants to get paid in other ways. For example, sometimes it is important to the seller that key employees remain employed. Trusted life long employees may have made a huge difference to the success of the business over many years and promises explicit or implicit may have been made. Other times, the seller wants to be sure that name of the business is preserved or that the style of doing business or the location of the business remains the same. Different sellers have different goals although cash in the pocket is often the major motivator. What is the point here? Well I acknowledge as a buyer it is very important to know where a seller is coming from. It can save the buyer a lot of money sometimes to make concessions of a non-cash variety, that are easy to make, if you listen to the seller. So I don't quibble with the idea of knowing the divorce, etc. in the case at hand. So page one, study the seller.

The calculus of valuation has many other pages though as well. Another is understanding where competitive potential buyers are coming from. What value do they place on the property? What is their strategic plan? How deep are their pockets? And on and on. So page two competition.

Another page: Study the market. What value has been placed on comparable assets?

But a significant page: Study what you can do with the asset. What is it worth to us?
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