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Methods or Standards of Business Valuation

How a Business is Valued

By , About.com Guide

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A business can be valued in a variety of ways. In many cases, an appraiser or broker uses several business valuation methods, including several in the business valuation report. Here is a discussion of the most common business valuation methods.

1. Fair Market Value Method of Business Valuation

Read more about how a business is valued using the Fair Market Value method.

2. Appraised Value of Assets and Business

Business valuation can also be determined by an appraisal, done by a certified appraiser.

3. Liquidation Valuation Method

Liquidation valuation of business assets or of the business itself is based on the assumption that the sale must take place quickly. Liquidation is the lowest value of any discussed in this article.

4. Multiple of Earning Business Valuation Method

The multiple of earnings valuation method is a way for potential investors to look at income and include factors such as management and industry leadership in the valuation.

5. Investment or "Going Concern" Valuation Method

This valuation method assumes that the company will continue in business as a viable entity for the foreseeable future, bringing the owner/s a high return on investment. This method usually results in the highest valuation amount.

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