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Valuations of Closely Held Business
- Valuation. How do you value a business?
- Talk about different methods to get to a value. Historical valuation, forecasting, industry comparison, etc. May use multiple valuations. Need to identify the appropriate approach to view the particular business.
- Public market has become good at valuation. Try to bring comparable public sales data back to the particular company.
- Subscription model method of valuation. A regular valuation may not consider this perspective. Many businesses are moving to a subscription model of operation. How do you value that? Conventional small businesses have not often understood this concept of revenue generation.
- Unusual ways to value the company. For example, instead of valuing a hardware sell and a service component in one model use a different model to value each component of the business.
- Willing buyer and seller is used for tax purposes but may have no relevance to real value. Example, ignores a strategic value/buyer.