Company valuation is a process and a valuation method used throughout the world to determine what a business is worth. A business's value depends on two things: a business's ability to generate profits and the risks associated with such profits. The results of the company's valuation rely on your business assumptions, the ability to envision your future and the risk associated with your business’s growth.
Business value is actually an anticipated price the company would sell for, or shares may be sold to an investor. The true price of the shares can differ somewhat depending on who evaluate the business value.
Requirements of valuation of a Company
- When the start-up process is in progress.
- CEO must provide Quarterly or Annual Updates.
- When you plan to raise funds from a Venture Capitalist firm.
- When you are planning to sell a business.
- Business valuation approach for early stage startups
- Comparable Transactions
- Discounted Cash Flow
- Exit Strategy and Investment Stage
- Potential and Talent
- Asset Valuation
- First Chicago Method