Literally dozens of methods of valuation have been developed over the years, most of which perform poorly under applicable stress-tests. We stick to tried and tested methods for valuing your business and its applicable assets. Here are some general and accepted methods we use when performing our corporate valuations.

Income Approach–We typically use a Discounted Cash Flow model to perform a single period capitalization method or a multiple period capitalization method. Cash flow from a specific business unit is used with accurate forecast assumptions of its sustainable life. Different methods must be considered when valuing intangibles as whether the patent is valued as an income stream or simply used for licensing purposes. Risks are factored-in and properly adjusted. In addition, an applicable discount rate is applied to each piece of IP. The income approach typically uses a discount of the assumed cash flows.

Adjusted Book Value Method–By adjusting the book value to match we can typically obtain a better grasp on value. This is frequently performed by using Excess Earnings.

Market Methods–Market comparables can be a great way to peg your business and its assets against recent industry-specific market trends. We use sources like Pratt Stats, Institute of Business Appraiser’s, MidMarketComps and Bizcomps databases to help determine specific and reliable comps and multiples for your company and its assets. In some cases, linear regression and other data modeling tools are used to help provide an enhanced view of the business.

Public Company Guideline Method–When valuing larger companies, we use larger datasets and often have access to better metrics. Typically these methods utilize some type of cash-flow discounting methodology with public data.

Because no two companies are the same, no two tailored approaches to obtain value entirely match. When we’re engaged to perform an in-depth corporate valuation, we like to assess every aspect of your business. Having a good 30,000 foot view of your company’s operations and financials, helps us ultimately make a better assessment of the business value.

Valuation of Intangibles

While similar to other valuation methods, there are some specific nuances to measuring the inherent value in intangible assets. Hence, we take a very disciplined and honed approach to valuing such assets. Today’s knowledge-based economy relies heaving on research and development for greatly enhancing their strategic advantage in the marketplace. Valuation methodologies differ depending on the motive and reason for their performance. Here are a few methods we use when valuing intangible assets.

  •  Income Approach
  • Venture Capital Method
  • Relief From Royalty 
  • Real Options Method (ROM) 
  • Market Comparables 
  • Historical Cost
  • Replication Cost 

Other generally accepted methods of valuation are used, depending on the type of business and asset being valued, the timing and the industry. For more information on our processes and methodologies, please contact us.