Most business owners and attorneys know the basics of the business valuation process.
For example, you might know that there are three approaches to value: the cost, market and income approaches. You might even know some of the methods that fall under these approaches, including the:
- Adjusted book value,
- Excess earnings,
- Guideline public company,
- Merger and acquisition,
- Capitalization of earnings, and
- Discounted cash flow methods.
But experienced laypeople also understand that the process of valuing a business is not simply a matter of plugging numbers into these "black boxes" and having the answer spit out the other end. Instead, the valuation analyst uses professional judgment to arrive at a reasonable conclusion of value.