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What are some reliable methods of valuation?

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Quick Answer

Reliable methods of valuation include asset, capitalization of income, owner benefit, and multiplier or market valuations, according to SME Toolkit. The most appropriate valuation method to use depends on the type of business and reason for valuation.

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Full Answer

The asset valuation method is appropriate for asset-intensive companies, such as retail business and manufacturing companies, according to SME Toolkit. Capitalization of income works well in valuation of service companies. It takes into account non-assets or the intangibles of an entity. Multiplier or market valuation determines the value of a business using an industry-standard, average-sales figure, as a multiplier. Owners benefit valuation values a business based on cash flow and profits generated.

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