How to value the worth of your business

How to value the worth of your business - http://money.cnn.com Avatar Posted by LeeAdams under Management
From http://money.cnn.com 4840 days ago
Made Hot by: on February 10, 2008 1:45 pm
To get a general idea of what comparable businesses are listed for, you can look somewhere like Business Valuation Resources. However, he cautions: "With a business like yours, seeking a strategic buyer, the usual multiples go out the door." Regardless of your industry, multiples are a very dangerous way to value a business, says Cathy J. Durham, of Capital Valuation Group in Madison, Wisc.

"Every business value is a forward-looking concept - what are the future economic benefits?," she asks. "Too many people think the business sheets and GAAP accounting can reflect that value, but they were never meant to do that."

The way she and other professionals calculate "the present value of future benefits" is by developing a discount rate for each business. Typically, it's between 20 and 30 percent, she says.





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Share your small business tips with the community!
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Share your small business tips with the community!