How To Value Your Small Business: A Guide - AXA Insurance

What is a business valuation?

Business valuations help people understand the real value of a business. There are several different methods that can be used to calculate a business’s monetary worth and usually a combination of methods is used to give a clearer picture.

It’s important that a valuation be accurate and that the value of a business not be over or under sold as critical decisions may be made based on this valuation. While they’ll be explored in more depth later in this article, here are a few of the methods that can be used to evaluate a business:

Discounted cash flow

Comparable analysis

Precedent transaction method

Industry best-practice

Entry valuation

Asset valuation

Times revenue method

Price/earnings ratio

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