lioneld111
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Very difficult because there are so many variables. Turnover, net profit, stability of market, barriers to entry, available workforce, working capital required, competition, patents, payment terms, others. For a small business, it's usually between 2 and 5 times the net profit, but this is hugely variable. If you are looking into buying one, hire a good accountant and a business analyst. They don't cost the earth and could save you a lot, even if it means you don't end up buying the company you thought was the best thing since sliced bread! Be very careful of business brokers, as they work for the seller only, not you. |
MonteCarlo
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Normally there are two values. Book value i.e. as per the financial reports, which gives the value in accountancy terms, which doesn't reflect the true market value.
Book value = assets - liabilities
2. market value - if u want to buy a company then this value is the key. = number of stocks in market (Assuming public listed company) x market price
Market price u can get from bloomberg, or finance.yahoo.com. And number of shares outstanding also u can get from finance.yahoo.com.
In acquisitions u take market value of these comapnies and add a bit of premium and make acquisition. check out damodaran website (search damodaran on google - he is the guru of valuation - New York University MBA professor) |
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