ABSTRACT
This chapter provides a brief synopsis of valuation so that an entrepreneur can economically and rapidly determine which offers are unreasonable and which are worthy of further consideration. While historical information is very useful for valuing a traditional business, it may be a luxury not available to an entrepreneur. Going-concern value is the value of a business as an operating concern rather than the sum value of all the individual assets that are owned by the firm. Most businesses are purchased based on the anticipated cash flows. Therefore, the purchase price would be based on the value of the income to be generated by the business rather than on the resale value of the inventory, office furniture, and so on that make up the firm. The market comparison approach goes by many different names in the literature of business valuation—market multiples, market data, market comparables and sales comparison.
