Business Valuation is never an exact science.  That said, when you are working with professional valuators, with decades of experience valuing virtually every kind of business entity, then you have your course to an accurate business valuation.

Determining the value of any business is achieved through comparison of income levels and asset values.  Usually, the profitability of the company drives the business value.

Take a moment to educate yourself as to methodologies used in determining business value because there is no "one size fits all" approach.

The Income Approach

This approach measures the present value of the company's future income stream.  This approach considers financial forecasts for the business that can span several years to arrive at the present value.  This is an excellent method for arriving at an expected return on investment.

The Market Approach

This approach compares public company performances with a private entity's performance.  The company's financial history is analyzed on a weighted average basis and a price earnings ratio is then determined in comparison of the company to public companies in the same business arena.  Next, a discount is determined and applied.

The Excess Earnings Method

This method is based on the concept that the fair market value of the company is comprised of two components:  net tangible assets and intangible assets.  The approach derives it name from the method used to estimate the fair market value of intangible assets.

The Cost Approach

This approach is often used on unprofitable businesses.  We measure the current net value of the assets and then what it would cost to replace those assets.  We consider replacement value, liquidation value and book value to estimate current market value for the enterprise and/or its assets.