Publication number: ELQ-93939-1
View all versions & Certificate
Business Valuation Template
Determine the value of your firm using three methods to use in different buy/sell situations
At various times privately held firms face the need to put a monetary value on the business. This need may arise due to an impending merger or acquisition, a need for additional private financing, the establishment of an employee stock ownership program (ESOP), a need to define management succession, or family issues such as death or divorce.
Determining the exact value of a private firm is a complex task which involves the appraisal of assets, reviewing the level of management salaries and the close examination of any transactions between the company and its owners. Eventually, valuing a private firm also involves a large degree of negotiation.
This discussion is intended to provide management with a starting point in determining the value of the firm. Any definitive valuation would require a careful review by a qualified appraisal expert. However, some reasonable estimates can be made based upon the fact that in almost all valuation systems, market value is influenced by two key factors:
1. The net value of the assets after paying all debtors.
2. The current value of anticipated future earnings from the business.
These factors can be evaluated either individually or in combination. This report will examine three specific methods of valuation that combine the two factors:
1. Net Asset Value--Focusing exclusively on the asset base of the firm. Typically, this model will produce the lowest valuation.
2. Discounted Future Earnings--Focusing exclusively on the earnings potential of the firm. In most, but not all cases, this approach will produce the highest valuation.
3. Assets and Earnings--Combining the two previous models in an attempt to find some mid-range valuation point.
This template is designed to assist you in placing a specific dollar value on your business. It will do so by using these three most commonly discussed valuation methods. Consequently, it will provide three specific (and very different) values that could be valid under different buy/sell situations.
Note: The selling price of a business is inevitably determined by intensive negotiation between an informed buyer and an informed seller. This template is in no way intended as a replacement for that negotiation activity. It is simply a tool to provide a starting point in your business valuation process. Don't make it a substitute for judgment.
This business tool includes
1 Excel Model
Dr. Albert D. Bates offers you this business tool for free!
download for free
Add to bookmarks
- Herman Hermawan(last updated: 22/06/2018 10:05)
- Kanini Mutooni(last updated: 22/06/2018 09:17)
- Mueez Rahman(last updated: 20/06/2018 12:19)
People using this tool also downloaded
All in One Private Equity ModelUsed by Investment Professionals at Private Equity and IB Firmsfinancevaluationdcfevaprivate equityinvestment bankinglbofinancial statements3,972 remove_red_eye$180.00by John Swan
LBO model - Leveraged Buyout AnalysisA step by step LBO model tutorial. It is easy to use and we provide support if needed. Have fun modeling!financevaluationleveraged buyoutprivate equityinvestment bankinglbom&amergers & acquisition9,504 remove_red_eye
Discounted Cash Flow (DCF) ModelA step by step Discounted Cash Flow Analysis Tutorial (DCF model)analysisfinancevaluationdcfprivate equityinvestment bankingdiscounted cash flowvalue of a businessdcf model18,701 remove_red_eye
CEQ Method Valuation ModelValuation by the CEQ Method based on Discrete Scenario Cash Flow Forecastfinancevaluationcash flowsbetaprivate equityentrepreneurpresent valuesceqcertain equivalent1,255 remove_red_eye
LBO Model - Company Valuation ToolAn LBO Model to learn how to Value all types of Businesses Like a Private Equity Professionalfinancevaluationleveraged buyoutprivate equityfinancial modelinglbolbo analysislbo model1,876 remove_red_eyefreeby Jon Taylor
Simple LBO Template Excel Model (Leveraged Buyout)This LBO excel model will help you to view the possible opportunity when potentially acquiring a company with debt.acquisitionfinanceleveraged buyoutdebtprivate equityinvestment bankinglbo176 remove_red_eye$9.00by Alexander Jarvis
RADR Method Valuation ModelValuation by the RADR Method based on Discrete Scenario Cash Flow Forecastfinancevaluationcost of capitalcash flowsprivate equityentrepreneurradrrisk adjusted discount ratepresent values1,146 remove_red_eye
Two-Stage Free Cash Flow to Equity (FCFE) Discount ModelValue the equity in a firm with two stages of growthfinancevaluationfcfefree cash flow to equityequitytwo-stage growth933 remove_red_eye
Generalized Free Cash Flow for the Firm (FCFF) Excel ModelCompute the FCFF (Free Cash Flow for the Firm) Model for a Firm with this excel spreadsheet model.financevaluationfirmfree cash flow for the firmfcfftransition456 remove_red_eye
Estimating the Value of Financial FlexibilityCalculate the value of financial flexibilitystrategyfinancevaluationdebtplanningfinancial flexibilityflexibility117 remove_red_eye
Any questions on Business Valuation Template?
The user community and author are here to help. Go ahead!