How do you value a company?

[Justthetip]

What things come into play when putting a price on a business?

[Eric Mc]

Actual balance sheet value - total assets versus total liabilities.

Future income streams - the expected levels of income from its customer bases.

Goodwill - the indeterminate factor of how much of the success of the business is down to the personal relationships established by the current proprietors.

Market Value - what are other businesses of a similar size in the same sector being sold for? This is not always easy to determine as not many businesses are identical.

[shirepro]

I once did some work with a psychologist who had been called in to assess the quality of the staff before a bank lent someone the money to invest!

[shadowninja]

There's software out there that could help. Google for it

[vixpy1]

It depends on the sector, growth possiblities etc.. as a very very general guide..

Times the annual profit by 8-10 and add the assets.

[Justthetip]

Thanks for the help guys.

[rje]

If my memory serves me right we covered this in quite a lot of detail a few montsh ago. Including p/e multiples , cashflow multiples as well as striaght asset valuation techniques.

Try the search engine. I'll see if I can find the link and post it as well.

R

[rje]

www.pistonheads.com/gassing/topic.asp?t=114837&f=92&h=0

Link as promised.