Calif. A company that has survived 20 years is a proven commodity. New companies, on the other hand, suffer high failure rates.
Nobody intends to fail, but a great many people do.
Private business valuations are based on a series of financial calculations, complicated by fluctuating markets and industry idiosyncrasies. Unless you are very knowledgeable about this company's sector and comfortable with number-crunching, hire a certified business appraiser to give you an informed opinion about what the company is worth. A professional appraiser will go over the company's books and evaluate its industry position, taking into account economic projections and national-sales databases. There are some general guidelines that appraisers use to put monetary values on intangible assets such as name recognition, credibility, customer lists, vendor relationships, long-term contracts, and overall business goodwill. Most small, privately held businesses will sell their stock for three to six times that income figure, Sliwoski explains.