Quite true. And it's possible that (due to regulatory/tax/social/etc. factors in India) small businesses could only be sold at large discounts to their "Wall Street theoretical" values - even in a perfectly efficient market.
I originally commented in response to amadeuspagel saying "If there's a whole industry of them, shouldn't there be lots of competition to buy these companies?" - by pointing out a simple way in which the market could be very inefficient.
Yes, even if there's a carved-in-stone rule that businesses sell for (say) 10X their annual profit, there will be plenty of business owners who imagine that their business is somehow the exception.
Related is the problem of owners misrepresenting their businesses to potential buyers. Which would lead perfectly rational and honest buyers to offer them far below 100 paise on the rupee, due to the risk of being swindled.
Quite true. And it's possible that (due to regulatory/tax/social/etc. factors in India) small businesses could only be sold at large discounts to their "Wall Street theoretical" values - even in a perfectly efficient market.
I originally commented in response to amadeuspagel saying "If there's a whole industry of them, shouldn't there be lots of competition to buy these companies?" - by pointing out a simple way in which the market could be very inefficient.
Yes, even if there's a carved-in-stone rule that businesses sell for (say) 10X their annual profit, there will be plenty of business owners who imagine that their business is somehow the exception.
Related is the problem of owners misrepresenting their businesses to potential buyers. Which would lead perfectly rational and honest buyers to offer them far below 100 paise on the rupee, due to the risk of being swindled.