Market Based Business Valuations are valuation techniques that rely on the direct comparison of the subject company's stock to stocks of publicly-traded companies or to other similar equity transactions that have occurred.
This method calculates the value of the business based on prices actually paid for by comparable, privately-held companies. It follows the simple mathematical process of determining the ratio of sales price to net sales, sales price to net income, or sales price to net book value shown by the comparable sales data, and applying these ratios to the net sales, net income, or net book value of the company being valued.
This method calculates the value of business using information from previous company stock sales that were conducted at arm's length.
This method calculates the value of a business based on a standard industry formula or rule of thumb, if one exists. These formulas are often derived from multiple sales transactions in a particular industry that have occurred over an extended period of time.
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