by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is Replacement Value (or Substantial Value) of Assets Method? A second, asset-based valuation method looks at the operating assets of a business and assigns a value based on what it would cost to replace them. This approach evaluates the cost of replacing the...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is the First Chicago Method of Business ValuationThe First Chicago Method is a hybrid approach that employs multiples to derive a terminal value and discounts future cash flows to arrive at a present valuation. Notable about this method is that it requires three...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is Liquidation Value Method of Business Valuation?Liquidation value is an asset-based method based upon the value that the business would immediately receive upon selling the asset on the open market. Immediately means selling the asset within a six to twelve...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
Strategic Considerations in ValuationSubjective factors are routinely used to either discount or justify a premium valuation. For example, a specific company may derive a valuation for a firm based upon strategic considerations that are unique to that...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
What is a Market-based Approaches to Valuation?Market-based approaches value the business based upon the productive characteristics of the business in a given market. These methods focus on comparisons of like businesses, transactions, or industries (known as...
by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles
Types of Comparables Used in Business ValuationA company may be valued using any number of characteristics about the business. In general, the price of that company’s total equity is compared to some value characteristic of the company, such as the before or...
