Determining the realistic value of a business is extremely important and a balance sheet usually will not provide the information needed to make this determination. Also, appropriate techniques used for estimating the value of a business will vary depending on the purpose of the valuation. We commonly select one or more techniques from a list of twelve options according to our brief.
NBA is asked to make business valuations for the following purposes:
1. Placing a value on the founders interests in the business
2. Valuing ownership interest as a result of the addition of investors with a reduction in ownership percentage
3. The sale or purchase of a business
4. Insuring key partners or individual owners
5. Estate planning
7. Buy/sell agreements
The appropriate valuation techniques will depend on which of these or other objectives you are trying to achieve.