How Does Business Valuation Work?

Business valuation is a process of determining the value of a company, which could be useful in the following situations:

• You want to sell your business due to retirement, family, or financial reasons

• You need financing for expansion or due to cash flow problems

• You may have potential investors who want to see the value of your business

• You may be adding shareholders and want to determine the share value

Whatever your reason may be, business valuation in Singapore may help you get the most out of the sale of your business.

Business Valuation Methods

It’s not only a business that may be evaluated, but there are also machinery valuation services as well as valuation for plant and machinery, which assess these assets of a business.

But, how is their worth evaluated?

✓ Asset-Based Approach - It takes a look into all the investments in the company, which can be done either by book value or liquidation value.

✓ Earning Value Approach - This approach is based on the idea that the value of a business is its ability to generate money in the future.

✓ Market Value Approach - Lastly, this approach determines the value of a business by comparing it to a similar business that has recently sold.

Which is the Best Approach to Business Valuation?

There’s no concrete answer to determine which is the best approach to evaluating a business worth. More often than not, the fairest approach to set a selling price would be using a combination of at least two valuation methods.

You can seek the help of a professional for business valuation advise. Twin Pillars is a business valuation advisory service provider in Singapore. Visit their website to inquire.

What are your thoughts about business valuation? Leave a comment below.

Resources: https://fcglobalpharma.kinja.com/how-does-business-valuation-work-1842284082?rev=1584081099240