APPENDIX C
Valuation Concepts
What Is a Business Really Worth?
What is your business worth? This is a question that most entrepreneurs must eventually answer because they are either buying an existing business or selling one of their own. And answering it correctly is extremely important. If you pay too much for a business, your rate of return will be disappointing. Similarly, if you underestimate the value of an entity you are selling, you will shortchange yourself without knowing it.
Valuing an ongoing business—large or small—is neither easy nor exact. In most cases it is the domain of experts. But the subject is too important to leave to experts. As an entrepreneur you should be familiar with the various valuation approaches used by experts, ...
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