ARE YOU PAYING TOO MUCH?

A good example of this is the .com crash in the 90's where the price of IT businesses was inflated through a frenzy of buying while the underlying value of the business did not support the price.

Without engaging in micro economic theory, price is the point where the demand and the supply meet - how much the buyer wants to buy and the how much the seller wants to sell. 

While price is what you will eventually pay, what you will receive will be the value.  Understanding the difference between these two concepts is key to making sure you don't overpay for your business making it unsustainable or unprofitable.

To illustrate, let's look at equity shares on almost any stock market.  The recent downward shift in price or the amount that a buyer and seller can agree on, should in theory bear some correlation with the value of the underlying share.  This however in practice is skewed - particularly in times of great uncertainty amongst buyers and sellers alike. The value of the share - as represented by the underlying assets and revenue generating ability may not have changed at all with the recent downward price shift.

The value is what you are getting and the price is what you pay. Its also the value that will need to generate sufficient income in the future to justify the price!!