Valuation Methods

Generally, there are three main approaches to valuations:

The asset approach can sometimes constitute the prime determinant of corporate worth depending on the nature of the operations of a company (such as a real estate holding company) and/or whether the outlook for a particular company’s future earnings is somewhat uncertain.

The income/cash flow approach is appropriate in most going concern situations as the worth of a company is generally a function of its ability to earn income and provide an appropriate rate of return on investment.

The market approach values the equity of a company based on analogous multiples as observed in publicly traded statistics and/or privately traded databases.