Aug 13, · By William Bruce. Updated April 26, As a business broker and appraiser, I’m often asked how to value a business. The valuation of a privately held business is not an exact science but there are guidelines and rules-of-thumb that can be used for a close approximation of value. Aug 01, · 5 minute read 6 Rules of Thumb for Business Valuation. When it comes time to buy or sell a business, it’s important to set your personal feelings aside in order to do an accurate business valuation and establish a realistic and competitive selling njwx.infod: Oct 24,
Rules of Thumb in Business Valuation: What Are They Worth? Although a business valuation rule of thumb is easy to use, the value it indicates should never be considered valid unless it is backed up with more detailed valuation methods specific to the business and industry. Dec 03, · The application of a rule of thumb includes some basic math, usually multiplying the selected source of income by a range of numbers. Each industry, or type of business, usually has three or more different valuation rules of thumb that could potentially be applied to it.
This is an excellent resource for any individual involved in valuing, buying or selling privately held businesses. This page guide also details reasoning, alternative methods, outside references and pricing tips for valuing small businesses - as well as the limitations of relying on rules of thumb. Disclaimer: While valuation guidelines and example selling multiples by industry and many times more accurate than generic overall rules of thumb, it’s important to understand that every business is different and thus your valuation may differ.