The pre-money valuation assesses the value of a company before the next round of funding is accepted. It sets the expectations of both parties — investor and entrepreneur — for how much ownership of the company the investor takes for the investment. Is the investor going to receive 10% or 90% of the company. 

For example, a company with a pre-money value of $50,000 that accepts an investment of $200,000 knows that the investor will expect 80% of the company. If the pre-money value is $300,000 the investor should expect to get 40% of the company. With a pre-money valuation, you are prepared for the investor who looks you in the eye and says “I’ll give you $25,000 for 51% of your company” You are ready to make a counteroffer and negotiate your deal.

Lack of experience and the natural trepidation of entering into a new business experience often drives a wedge been investors and entrepreneurs, keeping deals from being done.  In talking with people from both groups over the years, I’ve learned that it is an inability to determine that value of the investment kills the deal, sometimes before negotiations begin. 

The pre-money valuation provides a value snapshot that the founders can use to raise the first outside money from angel investors or early-stage investment venture capital companies. Your valuation gives you a thoughtful reality check that considers both the upside that pushes the value and the risk factors that limit the value. You will receive a value range based on two standard valuation methods.

A Fair Market Valuation is done for the purpose of valuing a business for the following purposes.

• business sale or purchase
• Merger or acquisition
• exchange of ownership for work or debt
• minority ownership value
• succession planning

Fair market value of anything is the price that a willing buyer and a willing seller agree up on a specific date.

A fair market value of your business establishes a foundation that you can use in negotiations to sell a part of your business. Fair market value is based on the premise that your business has present value and future value that will continue to built.

You will have three valuations based on the three approaches most appropriate for your business. , You will be able to discuss this valuation based on my comprehensive appraisal report. To get to a point where you can talk with confidence about the value of your business.

The valuation of your closely held business provides you with a solid point of negotiation.

This is not book value which is simply its value at a distressed sale. It is not divorce valuation, either.