Other Valuation Techniques
Edmund Sears, a corporate valuation expert from the Benchmark Consulting Group in Boston, lists the major approaches to valuation as follows:
1. Cost-based approaches
- Book value
- Adjusted book value
- Liquidation value
2. Market approaches using comparables
- Price to earnings
- Price to pretax earnings
- Price to cash flow
- Price to book value
3. Income approaches:
- Capitalization of earnings
- Excess earnings methods
- Discounted future earnings
- Discounted future cash flow
Sears states that appraisals must be done with full knowledge of the facts, circumstances, and all relevant factors pertaining to the subject company. A particular valuation technique that is appropriate for one company at one point in time may not be appropriate for that company at another point of time or for another company at any time.
* Source Adams - Buying Your Own Business
Identifying opportunities, Analyzing true value, Negotiating the best terms... by Russell Robb