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How to Value a Company or Business

Companies and business valuation is the process of determining the transaction value (or trading range) of a particular business entity or economic unit. It differs from real estate appraisals and methods that are used to determine property values. Business valuation is a more extensive process. However, it can integrate the results of real estate appraisals into the total value of the company.

The valuation can be geared to evaluate the company as a whole or just as a business unit. The relative position of the company will also interfere with the determination of its value. Most valuation techniques use a common element: the time value of money. Assessment techniques selection must be based on the objectives and strategies of buyers and sellers. Whether for the seller or the potential buyer of a business, the value can be determined by any of the valuation methods presented. The essential difference stems from the expectations each has on the future of the business and the alternative possibilities of obtaining or applying the funds involved in the value of the transaction.In order to valuate on a risk-taking criteria basis, calculated and published statistical information for the different sectors of activity and industries is used. Learn about the main methods of business valuation, or get in touch with our business services

By Alberto Soares

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