Everything you Need to Know About Business Valuation

The modern world is filled with thousands of opportunities to grow and prosper. Owning a business has suddenly become the best career choice for many. The technicalities that are involved with a business can cause massive chaos and confusion if you do not have idea about the business. It is advised to collect information about the little things that matter while owning a business.

One of the most crucial things that matter for any businessman is to know the current valuation of his business or in technical words “Business Valuation”. This is an easy to go term in the corporate world and the role of Business valuation is heightened in case you are planning to sell your business. Business Valuation gives you the realistic value of your business along with a detailed overview that compels the buyer to pay as per as the valuation of your business.

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How to Value an E-Commerce Business for Sale?

You may have a trendy website or a not so user-friendly website. You may have other business requiring priority so not able to give earnest attention to your website. Perhaps you have increased competition for your e-commerce business or you just want to cash it out and invest that money into something else. While you have your own reasons to sell out your e-commerce business, you still want the best price from the buyer. But let’s face it! Determining the value of an online business for sale is not easy because of its intangible nature.

How much is your e-commerce business worth? It is certainly not determined by the number of hours you have put in or the SEO and promotion you have done or the growth potential it has. Buyers of an e-business are interested in the profit that a website generates. The other activities are ultimately focused on increasing the profits and hence do not increase the value of your e-business. Continue reading “How to Value an E-Commerce Business for Sale?”

Business Valuation Methods – Income Approach

Whether you have a business for sale or want to acquire a business, you should do valuation of your business. If company valuation is done properly, you will be able to ask fair market price and increase the chances of getting deal closed quickly. There are various methods used for business valuation such as Capital Asset Pricing Model, Modified Capital Asset Pricing Model and Weighted Average cost of Capital. We have explained here few business valuation method using Income approach to help you understand it.

Valuation based on Income approach demonstrates how to value a company based on its ability to generate desired income or economic benefits to its owners. The financial benefits such as discretionary cash flow or net cash flow is multiplied, discounted or capitalized to perform business valuations. Proper selection of capitalization rate or discount rate or valuation multiples will be the key for effective valuation of your business. Continue reading “Business Valuation Methods – Income Approach”