Types Of Business Valuations

There are several different types of business valuations that can be performed, depending on the purpose of the valuation and the type of business being valued. The most common types of business valuations are:

  1. Market value: This is the most commonly used type of business valuation, and simply refers to the current market price for a business. This can be determined by looking at similar businesses that have recently sold, or by using a business appraiser.
  2. Asset value: This type of business valuation is typically used for businesses that are being bought or sold, and looks at the value of the business’s assets, including equipment, inventory, and real estate.
  3. Earning value: This valuation method looks at the business’s ability to generate income, and is often used for businesses that are being sold. The business’s earnings history, growth potential, and profitability are all taken into account.
  4. Business risk: This type of business valuation is often used for businesses that are seeking investment capital, andassesses the business’s risk factors in order to determine its value. This can include things like the business’s financial stability, competitive landscape, and management team.
  5. Intrinsic value: This valuation method looks at the underlying value of a business, without taking into account market conditions or other external factors. This is often used for businesses that are not publicly traded, and can be difficult to calculate.

The type of business valuation that is right for your business will depend on your specific needs and goals. If you’re looking to sell your business, then the market value or earning value of your business will be most important. 

However, if you’re seeking investment capital, then the business risk valuation will be more important. And if you’re simply trying to determine the intrinsic value of your business, then the intrinsic value method will be most appropriate. 

Whichever valuation method you choose, make sure that you work with a qualified business appraiser to ensure that the calculation is accurate.