When determining the value of a business, there are a few key factors to take into consideration. Some of the factors that an appraiser will look for in a business includes: a positive and increasing cash flow, quality of the workforce, , growth potential, product diversity, and the condition of the facilities. There are three primary methods to valuing a business. They are 1) asset valuation, which takes into consideration the cost of replacing your tangible and intangible assets, 2) market valuation, which looks at multiples of sales, earnings, and cash flow, and 3) income valuation, which is based on projected cash flows. Whichever method is used for the business, keep in mind, that it’s best to consult a valuation expert to help ensure that the analysis is done correctly.
Sources
http://www.bankrate.com/brm/news/biz/Capital_borrowing/20000113.asp
http://www.entrepreneur.com/article/51628″>http://www.entrepreneur.com/article/51628
http://www.divestopedia.com/2/1041/maximize-value/company-premium/master-ten-value-drivers-to-sell-your-business-at-the-highest-price