What Is Fair? Why FMV Is the Floor, Not Your Target
Fair Market Value is the lowest price you should ever accept, learn why marketability, not revenue, drives premium exits for business owners.
Fair Market Value sounds like a victory. It is not. For any business owner planning an exit, FMV is the lowest price you should ever shake hands on. The real money lives above it, in a market most owners never bother to open. Want to know where it hides?
10 KEY TAKEAWAYS, WHAT FAIR MARKET VALUE REALLY MEANS
FMV is your floor: It is the minimum acceptable outcome, never the target you build toward.
Marketability beats revenue: A wider buyer pool moves price more than another point of EBITDA.
Fair is a myth: The word assumes rational buyers, your job is to make them irrational.
Open the whole market: Competitors are the smallest slice of your potential buyers.
Information is leverage: The more informed party always wins the negotiation.
Due diligence runs both ways: Most sellers never investigate the buyer, that is a costly mistake.
Compulsion destroys value: A seller forced to sell hands the buyer the price.
Survey your shares: You research your products, you should research who buys your company.
Bidding wars overpay: Multiple motivated buyers break the rules of FMV in your favour.
Strategy starts years early: The buyer who overpays is already out there, find them now.
📚 READING PREREQUISITES
Each post in this series builds on the technical groundwork laid in earlier entries. The content progresses in depth, so prior understanding matters. Core valuation ideas are revisited on purpose, not as filler, but to show how foundational concepts interconnect and stay central to every analysis that follows.
Recommended Prior Reading:
What Fair Market Value Actually Says
I once asked a roomful of owners whether they wanted Fair Market Value for their business. Hands shot up. Then I told them the truth: FMV is the lowest price I would ever agree to. If I get my client exactly FMV on a sell side deal, I have failed. On a buy side deal, paying FMV means I failed too. My job is to sell higher or buy lower.
Here is the textbook definition, the same one used across the appraisal profession:
The highest price obtainable in an open and unrestricted market, between informed and prudent parties acting at arm’s length and under no compulsion to act, expressed in terms of money or money’s worth.
Read it slowly. Every clause is a door you can pry open. Let me break the definition into its working parts.
