Comparable Small Business Sale Prices Are Not Reliable.
Brokers and other business valuators seem to believe in the John Chretien quote.
“A proof is a proof. What kind of proof? It’s a proof. A proof is a proof. And when you have a good proof, it’s because it’s proven”.
“There are three types of lies — lies, damn lies, and statistics.”
Without a meaningful way to calculate intangible assets, valuers typically take another easy way out. They buy data from data brokers and render it into what they call “Comparable Business Sale Prices”.
I believe the sale price data they buy is not incorrect, but in most cases is inadequate in depth to suggest the comparable business is actually comparable.
I am not suggesting business sale price data is incorrect. My concern is the lack of intangible asset depth in the data collected, and the way valuators use business sale price data without knowing if the intangible asset components are truly comparable.