Business Valuation 101: The Five Myths of Valuing a Private Business

As you work tirelessly to meet the everyday challenges of running your own business, you may wonder why you should be interested in a column on valuing your business. After all, valuation is something you will be concerned about some time in the future when there is "need" for a valuation. If you feel like this and you stop reading, you will be missing an opportunity to insure that your business will survive and prosper.

Understanding the factors that determine the value of any business will pay tangible dividends by focusing you on ways to increase your firm’s short and long-run profitability. Moreover, if you choose to sell your business at some point in the future, this knowledge will assist you in positioning your company to receive the highest price. Therefore, there is no time like the present to begin to understand what a business valuation is, under what circumstances a valuation is customarily completed, and the critical issues to watch out for when events dictate that you undertake a business valuation.

By Dr. Stanley J. Feldman, Chairman, Axiom Valuation Solutions and Associate Professor of Finance, Bentley College

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