The subject of the realistic value of your business can be one of the most difficult topics during the exit strategy process. Business owners often feel:
- Buyers and appraisers are intentionally undervaluing the business
- The prospective buyer does not really understand the true value of the business
- The various valuation methods are not realistic ways to calculate value
- Not enough value is given to intangibles, such as employees, customers, etc.
DIFFERENT VALUATION METHODS
The process of placing a consistent dollar value on your business can be very frustrating. One of the frustrations is the numerous ways that buyers and appraisers use to value a business. Additional irritation arises because some appraisers use two or more valuation methods within the same report. Below are some of the most common valuation methods:
- EBITDA Method
- Discounted Cash Flow Method
- Comparable Company Method of Valuation
- Comparable Transaction Method of Valuation
- Asset Accumulation Method
- Acquisition Debt Value
- Liquidation Value
It is highly recommended that you begin the process of calculating the current value of your company immediately.
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