Business Valuation
We are often asked to provide valuation estimates in conjunction with our business valuation consulting, or plan review services. We use the following business valuation methods to help clients develop a general understanding of their value. These simple valuation methods for small business provide quick results that are often very close to more complex valuation procedures.
Capitalized Excess Earnings Method
This method is designed to determine the value of business goodwill as well as the total business value. Business goodwill is determined as the so-called capitalized value of the business excess earnings. The excess earnings are defined as those economic benefits generated by the business over and above a fair return on its net tangible assets.
Multiple of Discretionary Earnings
The value is computed by multiplying the business discretionary cash flow by a factor, then adding the liquid working capital, defined as the difference between the business’ liquid assets and current liabilities. The multiplication factor used in the valuation is determined by assessing a number of criteria describing the business, the industry and competitive environment.
Market Comparables
The market comps valuation method is based on the comparative transaction method which is derived from actual business sale transactions. The intent is to have an estimate of the business value based on comparison against similar businesses which have been sold recently.
To learn more please call us in Connecticut at 1.203.298.4137, or email us at info@ftgfinancial.com.