The classic definition of a fair deal is one where an equally motivated buyer and seller agree on the terms in a good faith negotiation.

The valuation of privately held companies and family businesses is a subjective science. It is problematic at its core because there does not exist a direct market comparable for any business in the world. This fact is combined with the confidential nature of business sales and the lack of public data on completed transactions. Take the example of as standardized a business sale as exists, the sale of a franchised business model with strict standards and practices for operation. Even in this case, local market rates for labor, supplies, occupancy, and taxes vary from jurisdiction to jurisdiction resulting in different levels of profitability and company values, even if top line revenue is exactly the same.

The acquisition of a company is an investment decision. The decision to commit capital and take on liabilities is motivated by two economic opportunities. The first is the annuity or dividend return which can be projected based on a review of historical financials. If in a subject company EBITDA (Earnings Before Interest, Income Taxes, Depreciation, and Amortization) in 2024 was $2.5 million, EBITDA in the trailing twelve months is $2.6 million, and the average EBITDA for the company from 2022 – 2024 was $2.3 million, a buyer, CPA, CFO, bank, and/or investors could make a logical projection of what 2026 should look like from a revenue and profitability perspective. This information is the foundation for the valuation of most businesses using the simple equation of EBITDA times a multiple. The following article provides an overview of this calculation (https://ibainc.com/blog/gregory-kovsky/the-fundamentals-of-business-valuation-ebitda-times-a-multiple/). The second motivating force behind valuation of a business and an acquisition is the future potential for the business. Less than ten years ago, Microsoft purchased LinkedIn for $26.2 billion (https://news.microsoft.com/source/2016/06/13/microsoft-to-acquire-linkedin/). Today, LinkedIn is one of the most powerful business networking, marketing, and hiring platforms in the world. Did Microsoft overpay for the company in hindsight? Here are some statistics to review on LinkedIn as of 2025: https://kinsta.com/blog/linkedin-statistics/. Should the valuation of the company been entirely based on historical financial performance?

In the LinkedIn example, Microsoft was able to value their acquisition target and in a good faith negotiation agreement was reached to complete a transaction.

I am a strong believer that everything from an apple to SpaceX can be valued. In every transaction a buyer is asked to make a purchase decision on whether the commodity being offered is worth the expenditure of a specific amount. It puzzles me why in the business brokerage and investment banking world many so called “experts” often elect not to take a position on business value and instead rely on the “market” to establish the price through an auction process with an offer date. In this scenario, the buyer is asked to come up with a value, but why not the seller. Is it because the broker has no idea what the business is worth? Is it because the broker does not care whether the seller maximizes the value of the company in the marketplace? Remember no price allows buyers to offer anything? Perhaps, even an interesting trade (https://youtu.be/KRSd_ko9HG4?si=ERPcIWirI_NHwL_1). A minimum offer price establishes a price. Wouldn’t it be better to establish a high-end value versus a low end concept in the minds of potential buyers. An offer date sounds good, until no one makes an offer. What is the broker’s response when a buyer finds a business still on the market 3, 6, 12 months after an initial close to an auction?

IBA, as a fifty-year business brokerage firm serving the middle market and main street, does not employ an auction process for our listings. To the best of my knowledge, and I have been with the firm for 31 years, IBA has always priced the companies it was hired to sell. Why does IBA price its listings, the simple answer is that we can. IBA with its market leading body of successful performance involving the facilitation of over 4400 transactions across more than 20 industry sectors uniquely in the mergers & acquisitions profession has the knowledge, experience, and skill necessary to price privately held companies, family businesses, and associated commercial real estate. This level of knowledge, experience, and skill is not something that can be learned in a YouTube video, at a once a year conference, from a book, or even in under five years without dedicated mentorship and actual field repetitions facilitating transactions. We also put our money where our mouth is as a firm not seeking a dollar of compensation from our sell side clients until transaction completion regardless if the check received by our clients at closing is six, seven, or eight figures.

As the owner of a business, what should you look for in a broker in seeking to learn what your business is worth and how to successfully sell it.

Knowledge – A business sale intermediary should be sought who has sold similar businesses and has firsthand knowledge of transactions completed in your industry and geographic area.

Experience – A business broker should be hired who possesses the relevant experience needed to complete your transaction from having reviewed industry specific purchase & sale agreements, non-competition agreements, and employment agreements to valued work in process, net working capital, and inventory in the subject industry sector to having facilitated third party agreement transfers and having the resources needed to support equipment inspections, tax mitigation strategies, and securing financing. No one should summit Denali without a guide. Selling a business without an experienced intermediary can be equally treacherous.

Skill – At the end of the day, the job of a business broker is to get parties to “YES”. A M&A intermediary on the path to closing needs to obtain a “thumbs up” from the buyer, their CPA/CFO, attorney, bank, and investors. Having a business broker who can articulate, educate, and persuade parties enhances the probability of a transaction being completed. The American and National League Championships are currently being played. Ask yourself, would you rather have a pitcher that has won 20 games and has a 2.35 ERA on the mound leading your team or one who lost their last three games and frequently is headed to the locker-room by the 4th inning. Businesses don’t sell themselves. Professional Business Sale Intermediaries Sell Them. 15 – 20% of all businesses on the market sell annually. IBA sells 80 – 90% of its engagements year after year.

The best M&A intermediaries have the ability to price a business and justify its value to the marketplace. The ones who do not price a business, frequently cannot. They have created a business model that facilitates covering up a lack of knowledge, experience, and skill. Any parent who has asked their kids to clean up their room, knows to look in the closet and under the bed. Unpriced businesses are similar, there is something that needed to be done at the start of a business sale process that was avoided, but will need to be addressed in the future. As a professional salesperson, I would prefer to start the conversation about the value proposition of a privately held company or family business, rather than have to respond to a party who is trying to “get a deal” or establish the playing field for future negotiations. It is always better to play a home game than one in your opponent’s stadium.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, and accounting communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.