Use this tool to identify when a purchase price or business valuation has drifted from Fair Market Value (FMV) into buyer-specific strategic assumptions.

FMV vs. Strategic Value Recap

• FMV = Value to a hypothetical buyer in an open market
• Strategic Value = Value to a specific buyer based on synergies or integration

Red Flag Phrases

• ‘The buyer expects to…’
• ‘After acquisition, the buyer plans to…’
• ‘With existing operations, the buyer can reduce overhead…’
• ‘Buyer assumes improved margins post-close…’
• ‘Future performance under new ownership will…’

Review Questions

• Is the value based solely on historical, normalized financials?
• Were buyer-specific plans or efficiencies used to support the value?
• Would this purchase price or valuation still apply to a generic market buyer?
• Are growth projections treated as speculative or foundational?

Lender Tips

Strategic value may be relevant to pricing—but not to SBA lending. FMV is the only acceptable standard in most 7(a) business acquisitions.

If the valuation only ‘makes sense’ for this specific buyer, it’s likely a strategic value case.