What business valuation methods does ValuAdder use?
ValuAdder uses several leading valuation methods based on all three fundamental approaches to closely held business valuation: • Capitalized Excess Earnings • Market-derived Rules of Thumb • Multiple of Discretionary Earnings • Discounted Cash Flow • Net Present Value The Capitalized Excess Earnings is a classical asset-based business valuation method. First introduced by the US Treasury Department in the 1920’s, it is the definitive way to calculate the value of business goodwill and total business value. The Rules of Thumb method is behind the Rules of Thumb Tab in ValuAdder. The method allows you to make quick market-based comparisons against businesses of similar type. The Multiple of discretionary earnings method is used in the Earnings Multiple Tab for comprehensive income-based valuations. It is an example of the so-called Direct Capitalization business valuation methods. The Discounted cash flow method, supported by the Discounted Cash Flow Tab, provides an investment-oriented
