There are many methods and formulas available to help investors evaluate businesses for either sale or acquisition. These methods vary in complexity, but are frequently based on multiples of sales, earnings, book value, and similar definable results.

Large corporations frequently have either full-time merger and acquisition staff people, or access to such people. Much of today's business buying and selling, however, is done by individuals or small corporations. Many times, the capital nucleus of these enterprises are 401K or other early retirement funds which became available as payouts from down-sizing or re-structuring. Although adequate money may be available to consummate a deal, either the buyer or seller, or both may lack sufficient expertise to correctly evaluate a business.

Obviously, there are different motives in play. The seller wants the highest possible price and the buyer wants the lowest. However, a fair and reasonable price will work to the greatest benefit of both parties. In many cases, a business sale requires a carry-back by the seller with payments from the buyer. A fair price, and terms allowing sufficient cash for continuing operations will help ensure the buyer's ability to make timely payments thereby helping to satisfy mutual obligations.

The assets, stock, or combination of assets and stock either being bought or sold must be accurately and honestly evaluated for proper valuation. And, the validity and quality of the financial statements must be clearly understandable. There are numerous "behind the numbers" issues that require due diligence examination.