Business valuation is a lengthy process and procedure which
one can use to determine the business worth. Though it sounds easy getting the
valuation done of your business in a right way takes lots of time and
preparation. But why do you need to take the business valuation? There are many
reasons to get an up to date business valuation.
Reasons For Valuation
Due to retirement you need to sell your business, not only
for retirement reason can be anything, divorce, health or for any kind of
family reason.
Might be you are in need of equity financing or debt for the
expansion or for cash flow issue. The investor and the financer will ask you to
see the actual worth of your business.
If you are willing to add shareholder, one or many more. For
this reason, valuation is needed.
Whatever the reason is worth of your business
depends on many factors. It will start with the current
situation of the economy to the balance sheet of the business.
Who Will Take The Valuation
A business owner should never take the company valuation. It will be like you
ask a mother how talented her child is. So get the valuation done by a
professional like a CBV (Chartered business valuator)
Business Valuation Method
There are three type of business valuation methods are there
- Asset-based approaches-
Asset-based approach method is the total up method of all the investment
in your business. You can do the valuation of asset-based business on the
liquidation basis or on the going concern
- Earning
value approaches- This method is based on the prediction.
Capitalizing past earning is the most common earning value approach.
- Market
value approaches- With this method the company or business valuation
try to attempt to build up the business value. This valuation is done by
comparing your business with the similar sort of business which has sold
recently
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