Depending on the size of the business, some businesses will engage the services of a certified business evaluator. This is an individual who will go through the financials of the corporation, and based on the history, line of business, and other factors, come to a dollar amount that they think is appropriate, usually a net multiple on what the business has done in terms of performance. Some smaller businesses will look to their accountants to present their financials in a positive light. It really comes down to both parties agreeing what is appropriate and coming to an agreed-upon purchase price.
Some factors do change this slightly. In some circumstances where there is seller based financing, where the seller is effectively financing the purchase, you will see higher multiples due to the higher risk from the point of view of the seller. Typically, however, once you’ve gone through the financials and looked at what is appropriate in the lane, you can come to an agreement in a range of value and applying the facts of the transaction to come to an agreement. At the end of the day, however, the price is going to be whatever someone is willing to pay for it.