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Valuing a business
There are many reasons to determine the value of a business. Knowing what a business is worth is necessary when you are:
- buying a business
- selling a business
- selling a share in a business
- getting a business loan
- attracting investors
- valuing your own net worth.
There are different ways to value a business - some more complex than others — and each method has its advantages and disadvantages. Valuations are usually based on a combination of methods.
Because buyers and sellers often have different ideas about what a business is worth, it is a good idea to get a business broker or professional valuer to assess a business. A well-prepared, balanced and independent valuation can help speed up negotiations and offer a more complete picture of a business's value.
This guide provides an overview of business valuation, including the information you need to gather and the most common methods of valuation.