Business
valuation
methods fall
into the
following
categories:
-
Business
assets:
Looks at
the book
value
and
liquidation
value of
your
assets.
Either
could
end up
being
less
than
market
value
for the
assets.
-
Historical
earnings:
The
buyer
looks at
the past
history
of the
business
in order
to
determine
if
he/she
should
buy.
They
look at
earnings,
cash
flow,
debt,
growth,
etc.
-
A
combination
of
assets
and
earnings:
This is
the
method
of
combining
the
value of
assets
and
earnings
to
determine
a good
price
for the
business.
-
The
market:
Utilizing
the
industry
standard
for the
type of
business
you're
in.
Looks at
comparable
sales,
industry
rule of
thumb,
p/e
ration
earnings,
etc.
-
Future
earnings:
This
method
utilizes
projections
about
future
earnings
that is
discounted
to
determine
the
present
value of
the
company.
