Business Valuation Process
The 1 , 2, 3 process.
Determining valuation:
Growth opportunities, gross revenue, profitability trend, competition, age of business, customer base, buyer market economic dependence, extent of technology and research, employee skill level, vendor financing, proprietary products that are protected.
Cash flow considerations:
Net operating income, working capital requirements, depreciation and amortization, extraordinary expenses, capital expenditure requirements, long and short-term interest expense, owners benefits including salaries and bonuses.
Asset considerations:
Buyer considerations:
Negotiating additional value.
Terms of deal considerations:
Vendor financing, guarantees and warranties, non-competition agreements , management contracts. Determining business value is a subjective concept that utilizes both real data and professional judgment.