How Do You Establish A Company Valuation?
A company valuation is an essential component of a buyer-seller agreement, representing a working assessment of how much you as the seller expect to receive in exchange for your tangible and intangible assets. To some extent, company valuation is an extremely subjective process, and you can ask any price you wants for your company, provided you can find a buyer willing to pay that amount. However, there are certain reasonably objective benchmarks that both you and the buyer can use to establish a fair company valuation. Add the net profit for the previous two years of business activity to establish a base price for your company valuation. Use the net income on your income statements, which represents your gross sales minus your total business expenses. Adjust this amount for any factors specifically linked to your individual ownership of the business, such as interest payments on loans. Also make allowances for any one-time expenses that will be considered elsewhere in the valuation pr
