Valuing an Existing Business: What You Must Know Whether you're buying , selling , or planning growth, understanding how to value an existing business is essential. This guide outlines methods, metrics, and mistakes to avoid. ✅ 1. Purpose of Business Valuation Buying or selling a business Securing investment or business loans Strategic or exit planning Legal, tax, or estate planning purposes ✅ 2. Understanding Different Types of Business Value Fair Market Value: Agreed price between buyer and seller Investment Value: Value to a specific investor Liquidation Value: Asset sale under pressure Book Value: Net worth from balance sheet ✅ 3. Common Valuation Methods Asset-Based : Adjusted book value & liquidation Income-Based : Discounted Cash Flow (DCF) & Earnings Capitalization Market-Based : Comparable sales & revenue multiples ✅ 4. Financial Metrics to Evaluate EBITDA Profit margins Cash flow & workin...
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