Business Valuation Methods Guide
Methods, inputs, adjustments, and applications.
Valuation Methods
Discounted Cash Flow
Approach: Future cash flow discount
Best For: Going concern
Comparable Company
Approach: Market multiples
Best For: Public comparison
Asset-based
Approach: Net asset value
Best For: Asset-heavy
Transaction-based
Approach: Deal multiples
Best For: M&A context
Valuation Inputs
1. Historical financials
2. Projected cash flows
3. Discount rate
4. Market multiples
5. Comparable data
6. Asset values
7. Liability amounts
8. Growth assumptions
9. Risk adjustments
10. Terminal value
Valuation Adjustments
Control premium
Purpose: Ownership benefit
Range: 20-40%
Liquidity discount
Purpose: Market access
Range: 10-30%
Synergy value
Purpose: Combination benefit
Range: Variable
Risk adjustment
Purpose: Uncertainty factor
Range: Variable
Common Applications
1. M&A transactions
2. Investment analysis
3. Financial reporting
4. Tax planning
5. Estate planning
6. Partner disputes
7. IPO preparation
8. Strategic planning
Business Valuation Checklist
1. Gather historical financials. 2. Project future cash flows. 3. Determine discount rate. 4. Select valuation method. 5. Calculate base value. 6. Apply appropriate adjustments. 7. Compare to market data. 8. Document assumptions. 9. Prepare valuation report. 10. Review with stakeholders. Business valuation = informed decisions. Financials gathered. Flows projected. Rate determined. Method selected. Value calculated. Adjustments applied. Market compared. Assumptions documented. Report prepared. Review completed.