Business valuationBusiness valuation is an act or process of producing a conclusion or calculating the value of a business or an enterprise or a share in them (IES). At the same time, cost is not an unambiguous concept: depending on the situation and the assessment task, different cost options are used. Among them: Fair market value, Fair value, Investment value, Cost of operating enterprise, Liquidation value, Carrying value, etc.
In assessing the business, various methods of capitalization and discounting of income are used, methods based on information on analogical companies (including the use of valuation coefficients), methods based on the value of assets, and a number of others.
With all the variety of methods and approaches to evaluation, it is possible to formulate a conclusion that is shared, apparently, by the majority of appraisers: an enterprise (company, firm, etc.) costs as much as today's cost of future benefits that this business will bring to its owner or owners; With each benefit discounted to today's value at a discount rate (rate), reflecting the degree of risk that these benefits will not be realized.