How a Business is Valued

Valuing a business or ownership interest in a business is a complex process.  Much thought and analysis must go into completing a valuation, if the appropriate conclusion is to be reached.  The skills and expertise of a business valuator play a critical role in determining a value conclusion. 

Three commonly accepted approaches to value are asset, income, and market.  The choice of which approach to adopt depends on the specific facts and circumstances of each valuation.  Each approach utilizes various valuation methodologies.  The approaches and methods include:

Income Approach   |   Market Approach   |   Asset Approach   |   Factors to Consider

The asset approach is most appropriate when valuing a holding company or capital asset intensive company, or when valuing a controlling interest.  Asset methodologies are balance sheet driven and involve adjusting individual assets and liabilities on the subject company's balance sheet to defined values.  The weaknesses of the asset approach are that it may not value the intangible assets (goodwill) of a company nor does it focus on income generated by a company's assets as a whole. 

Barnes Wendling Valuation Services typically applies a combination of methods when determining the value of a business or ownership interest in a business.  The methods we select are unique to each valuation and we rely on our sound judgment to ensure the appropriate methods are used.