21 Methods of Valuation For the Closely Held Business
Ask any appraiser valuing the business which methods s/he will be using to evaluate the business, and why. Here is a list of 21 methods of Valuation For the Closely Held Business (family owned or small business) that can be used or combined:
1. Prior Sales of Company Stock (if any)
2. Sales of Comparable Companies (if the company is small good
data might not be available and a company’s uniqueness might
not be reflected in the sales of similar companies)
3. Book Value (Net Worth)
4. Adjusted Book Value
5. Price-Earnings Ratios of Comparable Public Companies
6. Ratio of Market Price to Book Value of Comparable Public
Companies
7. Capitalized Adjusted Earnings
8. Capitalized Excess Adjusted Earnings Plus Adjusted Net Worth
9. Capitalized adjusted Net Operating Income
10. Capitalized Adjusted Cash Flow
11. Capitalized Excess Adjusted Cash Flow Plus Adjusted Net
Worth
12. Discounted Future Earnings Plus Adjusted Net Worth
13. Discounted Future Cash Flow Plus Adjusted Net Worth
14. Capitalized Dividends
15. Dividend Paying Capacity
16. Return On Investment
17. Gordon Model Method
18. Purchaser’s Required Return On Investment
19. Industry Formulas (usually administered by trade associations
and/or industry publications)
20. Going Concern Value
21. What you can get for it…
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