
255
Chapter 13
Valuation Techniques
13.1 Introduction
Every founder believes in his heart of hearts that his venture is truly worth a
fortune, and it will be funded. From the founder’s perspective, it should be
obvious to every investor what an outstanding opportunity is being offered.
So why don’t investors beat a path to their door?
This chapter will explain how investors approach a business valuation. A
business valuation is the process used by investors to determine the nan-
cial worth of a closely held (private) company. For our purposes, a closely
held business is an organization owned and operated by a relatively small
number of owners.
The ...