Business Valuation


Unfortunately, there is not one simple answer, and, actually, there are probably several answers. Why? Because business valuation is an art not a science.

How Much Is A Business Worth?

Valuations are subject to the appraiser’s judgment, skill and quality of methodology. There are several approaches to determine worth. In most cases, we use Fair Market Value. This is defined as the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell.

Considerations for determining value include:

  • A capitalization of the net profit
  • If a business makes little or no money:  Asset value is the only value. (Goodwill + Inventory + Equipment + etc.) Can be sold as a whole or liquidated over time.

Remember, many other things can affect the value of a company. Location, size, competition, growth rates, industry trends, quality of books, ease of transfer, control issues, the time you have to sell, terms of the sale, leverage, what business broker you hire. This is a job for a professional. BND is here to help!