Business Valuation

Determining a fair price for the business can sometimes be a difficult undertaking. There is a variety of valuation methods that should be taken into consideration. Here are a few:

  • Capitalized Earning Approach: Focus placed on the return on the investment that is expected by an investor
  • Excess Earning: Similar to the capitalized earning method, except that it separates return on assets from other earnings
  • Cash Flow: Typically used when attempting to determine how much of a loan the cash flow of the business will support. This information can be used as a benchmark to measure the firm's ability to take on debt.
  • Tangible Assets: Values the business by total tangible assets.
  • The value of Specific Intangible Assets: This method compares buying a wanted intangible asset versus creating it.