Calculate what a business is Worth
- Thread starter Louis
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smallbushelp
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A business is worth what someone will pay for it. Sometimes, all you're buying is tangible assets. So one would calculate the fair market value of the tangible assets. But sometimes you're buying both tangible and intangible assets. I've seen where a business was valued at "X" times its revenues or cash flows. In that case, the business is valued based on its intangible assets: the future viability of the business.
So it would depend on what type of business you're trying to value. Is it a service based business or a product based business? Is it an e-commerce business or a brick and mortar store? Has the business been in operation for 2 years or 20 years? Have sales been increasing or decreasing over the last few years? All of these things should be taken into consideration.
So it would depend on what type of business you're trying to value. Is it a service based business or a product based business? Is it an e-commerce business or a brick and mortar store? Has the business been in operation for 2 years or 20 years? Have sales been increasing or decreasing over the last few years? All of these things should be taken into consideration.