Valuing a business is both an art and a science because there are no hard and fast rules. In fact, there is often a great deal of confusion among individuals about valuing businesses because of the many different methods that may be used.
With that said, while there are no set "rules" to valuing a business, there are generally accepted valuation methods and principals that most business valuators use to determine value. And once you understand some of the basic valuation techniques, you’ll likely begin to realize that business valuation doesn’t have to be as confusing as you once thought.
In this article, we’re going to explore reasons to value a business, some common business valuation misconceptions, the concept of "value" in business valuation, and the main valuation methods used by the pros.
Next, we’ll take a brief overview of business valuation to set the groundwork for understanding this topic.