Patent ID: 7778936

Claim:
A method of valuing a business entity with a processor comprising: inputting, into a processor input device ( 1 ) prior income statement information for the business entity and prior balance sheet information for the business entity, ( 2 ) forecast of sales, profitability, capital expenditure and working capital, ( 3 ) expected return on invested equity, and ( 4 ) expected willingness of one or more lenders to provide acquisition debt capital, its cost and repayment terms; assuming in the processor an initial business entity value and invested equity; determining, in the processor, projected income statement information, projected balance sheet information, and projected cash flow information for the business entity; determining, in the processor, return on invested equity and investor's cash flow after debt service; iteratively calculating in the processor a plurality of return on invested equity and investor's cash flow after debt service and converging on the maximum business entity value and minimum invested equity value based on ( 1 ) said expected return on invested equity, ( 2 ) said expected willingness of lender(s) to provide acquisition debt capital, its cost and repayment terms, and ( 3 ) selected minimum levels of projected cash flow after debt service, capital expenditure and working capital for the business entity, by iteratively changing one or both of (a) the invested equity, and (b) the business entity value; and displaying on a display device ( 1 ) the calculated maximum business entity valuation and ( 2 ) the calculated minimum invested equity associated with said calculated maximum business entity valuation.