There are several ways to value a business; the best valuation method depends on your type of business.
Businesses which year in, year out, generate healthy profits are often valued at a multiple of earnings.
Mature, cash-generating businesses can be valued on cash flow. That is future cash flows are estimated and then discounted - this is known as the discounted cash flow (DCF) method.
An asset-based valuation might be appropriate for stable businesses with significant tangible assets - property or manufacturing businesses, for example.
The cost of creating a business similar to yours can also be used as a basis for valuation. By this we mean trying buying the equipment, employing the staff, developing the products, attracting customers, and so on, and by conducting this exercise you could find the true value of a business which you are trying to sell or buy.
At FENCI we can help identify the best valuation method and guide you through the buying or selling process.