Common Valuation Mistake - Mixing Asset & Stock Sales

A common business valuation mistake to watch out for...indiscriminately mixing asset and stock sales when applying the market approach.

A stock sale typically includes all assets and liabilities of an entity.

Asset sales often don’t include assets such as cash, A/R and A/P, so the analyst will have to apply the multiple and make any adjustments in determining the value of the stock.

Don’t get them twisted!