AmiSight 10/7: Where the Rubber Meets the Road: Why the Valuation Matters
Some of the hardest calls I get aren't from entrepreneurs in trouble. They're from entrepreneurs who are excited.
Often it's an acquisition. A buyer falls in love with a business and is ready to pay whatever it takes. The numbers don't quite support the price, but the story in their head does.
Then the lender gets involved.
If you want to finance the deal, the lender will usually require an independent valuation, and it won't lend more than the business is worth. That's where the rubber meets the road. If you still want to pay the higher price, the difference comes out of your own pocket or from the seller.
That's often the moment buyers finally slow down.
The valuation protects the lender. It protects the buyer too.
Fear makes us rush. So does excitement.
When was the last time excitement made a decision for you?
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