Exact Price of Business
The exact price of business cannot be determined because
there are number of factor involved in business valuation. However, there are
number of model/method which can be helpful to determine the price of business.
Purpose of Business
Valuation
Business valuation is done to provide bases for decision
making. Business valuation does not provide you the exact price of business;
however, it gives you bases for negotiation and decision making. This is the
reason that business are not disposed off or acquired on the bases of value
calculated but on the bases of negotiation based on the price calculated through
different business valuation model.
Importance of Business
valuation
Business valuation provides bases of many critical decisions making
which includes the following
1. Deciding price of share in case of initial
public offer
2. Disposal of Business
3. Acquiring of business /Division
4. Calculating share price of Private Company
for legal and other purposes.
Methods of Business
valuation
There are basically three type of business valuation
method/model.
1. Asset Based Business Valuation
2. Earning Based Business Valuation
3. Dividend Based Valuation
