What does SAV stand for?
You will often notice the commonly used acronym SAV when looking at businesses for sale.
SAV stands for “stock at valuation” but what does that actually mean for someone interested in buying the business?
Simply put, it is a price–or value–that is levied on the stock held at a given time by that company.
Put simply, the stock value is determined just prior to the sale of the business and is not included in asking price for the business.
Once the stock value has been determined, the final sum that the buyer is required to pay to seller for their business will be adjusted accordingly.
What are the implications of a business listing that has + SAV?
Hypothetically, if you were looking at purchasing a clothing retail business that had the asking price of $100,000 + SAV, you will need to account for the fact that the $100,000 asking price excludes the value of stock.
If this business over invested in stock which they have yet not sold, you would need to pay for that stock on top of the asking price. This could bring that original $100,000 asking price to $350,000 if they had $250,000 worth of unsold stock.