Business Valuation

Assets, Cash Flow & Comps …

Business valuation goes far beyond simple multiples.  To get some idea of what your business might be worth, we will discuss three methods of valuation… 

It’s likely your business is your largest asset so it’s normal to want to know what it is worth.  However business valuation is what might be called a “subjective science.” The science part is what people learn in school: an MBA or a finance degree is a start, or you can become a business valuation professional by learning the theory behind business valuation and earn professional credentials.  The subjective part is much harder because every buyer’s circumstances can be different.  Therefore two buyers could look at the same set of company financials and offer vastly different amounts to buy the business.

Click the link below to see the full article which provides the basic science and math behind the three most common business valuation approaches.  Keep in mind that there will always be outliers that fall well outside of these frameworks. These are called strategic sales, where a business is valued based on what it is worth in the buyer’s hands. Strategic acquisitions, however, represent the minority of acquisitions, so use the three methods presented here to triangulate around a realistic value for your particular company.  Read full article…

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