A Brief Overview of Different Business Valuations in NJ

Posted by Zelinia Dsouz on June 30th, 2016

If you are in the process of selling your business, you will need to know how much your company is worth. You have worked hard to establish your business. Now, when you want to exit from the market, you deserve receive the best value for your business.

A thorough business valuation is the best way to assess the value of your business. It will give your investors and potential buyers a clear idea of the worth of your business by considering both tangible assets, such as cash and real estate, and intangible assets like intellectual property. Below-mentioned are a few business valuation methods used for assessing the worth of businesses:

Asset Business Valuation
In the asset business valuation process, a valuation expert measures the worth of your assets, including inventory, equipment, and real estate. Though this is fairly simple and popular method of the business valuation process, it does not accurately reflect the total worth of your business. Also, asset valuation doesn’t measure intangibles such as the goodwill of a company. And the goodwill of a company could be a large base of loyal customers. That’s why asset business valuation does not give a complete picture of the worth of a company.

Market Business Valuation
This method is also known as a market multiplier method. In the market business valuation method, the worth of a business is determined on the basis of a multiplier set by your industry.
For example, the benchmark for valuing companies in your industry may be four times sales. Therefore, theoretically, the value of your company would be four times its revenue.   

Earning Business Valuation
Earning business valuation is also known as income-based business valuation or the capitalization of earnings method. It determines the worth of your company on the basis of historic earnings. This method is ideal for the companies that have strong intangible assets. It must be taken into consideration that earnings valuation cannot predict future earnings.

As business valuations are often complicated, it is advisable that you should seek the help of a reputable Business Valuation Firm. Experience matters a lot, so you should always try to find a company that has at least 30 years of experience in working in the same domain. Usually, leading companies working in this field offer no-cost consultation to discuss business valuation needs. What you have to do is to visit the website of one such company and fill the form. The company will contact you promptly.

About The Author

The author is working as a freelance writer. He has written many articles and blogs on various topics related to business valuation process. For more information visit : www.sunbusinessvaluations.com