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Popular Methods to Determine
the Selling Price
One of the most common ways to calculate the value of your business. This approach compares your business to similar businesses that have recently sold in a private market.
Valuing your company with industry multiples is the most popular valuation method. A valuation
multiple is a ratio of a financial aspect such as revenue and cash flow compared to the company’s sale price.
Another approach to value your business is to determine the total value of the business’s assets. These assets include all tangible assets, such as inventory, furniture and fixtures, equipment, and land.
Discounted Cash Flow
The valuation approach seeks to forecast the cash flow the business will generate in the future and discount it to the present time. This method is helpful because you can predict the business’ profitability in the long-run. This approach is sometimes difficult to use for small companies because future earnings are harder to predict.
Liquidation value is the net cash that a business will receive if its assets were liquidated and liabilities were paid off today
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