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How is a business valuation works?

ValueNow > Blog > How is a business valuation works?

Depending on the work and its nature, each work will require a different perspective to be evaluated. It is the process of determining the fair value of a business of any size, using objective measures, and evaluating all aspects of the business. In most cases, business owners and shareholders have an exaggerated view of the value of their company. Without real knowledge of the value of their business, they make critical decisions that could lead their companies to incur heavy losses.

At ValueNow, we accurately and efficiently identify and measure drivers of value risk and then calculate all parameters to determine the correct economic value for any business or company. We also estimate the value of your business based on the current scenario of your business industry.

Based on the specific need of our clients, we create value based on the long-term impact of all the value drivers involved in the business, valuing your company based on various factors such as financial statements, cash flow discounting, business risk reduction, and asset valuation to optimize the high growth rate of your business.

At ValueNow, we valuate businesses based mainly on three main approaches:

1. Market-based approach

2. Income-based approach

3. Asset-based approach

whereas:

Market approach: Revenue is the primary valuation method used to determine the approximate value of your business. The business is valued based on doubling the company’s revenue. The revenue method uses multiples of current revenue to determine the maximum value of your business.

Income approach: It is discounted cash flow as an income-based approach. It determines the value of the company that is equal to the present value of the business it generates each year by projecting it into the future and then calculating the cash flow that the company can generate in the future.

Asset Approach: Real Business Value is an asset-based approach to business valuation. A company’s net asset value is interpreted by its total assets minus its total liabilities to determine the cost of rebuilding the business.

At ValueNow, our experts will help you get the true value of your business using the best approaches in business valuation.