There are a handful of common reasons why a business owner needs to do their business valuation. Some common examples are; looking to sell; looking to merge or acquire another company, needing financing or investors, possible tax purposes, and possible for divorce proceedings.
Each valuation will be determined by the scenarios mentioned above. As an example, in a sale scenario, the majority of private small businesses are sold as asset sales, whereas the majority of middle-market transactions involve the sale of equity—each of these sales would require a different business valuation method.
With all this in mind, now it’s time to explore some of the most common business valuation methods, keep in mind you’ll want to work with a business appraiser in Houston to get the most objective assessment of what your business is worth. Most small businesses are sold as asset sales, whereas middle-market companies are typically equity sales. This is where a certified appraiser can guide you to the best option. Let’s explore those options.do
Although understanding the different business valuation methods is important, if you do need to evaluate the worth of your business, it’s best to work with a professional. Although the approaches may seem simple enough on the surface, as we saw with the DCF example above, there are extensive and complex calculations involved in determining the value of a business.
This being said, not only will a professional be able to offer you an objective examination of your business, but they’ll likely be able to combine multiple business valuation methods to get you the most thorough sense of what your business is worth.