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.