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Home Questions

How is a company valued?

Posted by Bizversity

I highly recommend getting independent advice from a business valuer or broker. With that said, the four most commonly used valuation methods are as follows:

* Asset valuation, which is adding the value of the businesses assets and minus liabilities.

* Next, there’s capitalised future earnings, which is a method of determining the value of an organisation by calculating the net present value or NPV of expected future profits or cash flows.

* Earnings multiple consists of multiplying the business’ earnings before interest and tax or EBIT by your selected multiple.

* Comparable sales means looking at prices for recent sales of similar businesses, which I really encourage you to do.

 

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