
Through the education and experience I have gained, pinpointing which approach to valuing a business should be utilized is now much less of a subjective art and more risk-based than ever before. Don’t get me wrong! Using a multiple can still be a way to check against the results of much more detailed and industry specific calculations. In fact, the valuation profession suggests considering these so called sanity checks, aka Rules of Thumb, but usually only as a reasonableness check. Now, published formulas and methodologies exist that help remove some of the guesswork of determining which approach likely fits best given a particular fact pattern. With so much more information available at the valuation professional’s fingertips than ever before, don’t leave substantial value on the table by taking a shortcut approach to determining what your business is worth!
Feel free to contact me if you have a question about your business or the need to understand its value.