Monday, November 27, 2006

Multiples for Business Valuation Formulas

Wow . . . now there's a snappy, exciting title!

When our clients are buying or selling a business, they sometimes need a formula that they can use to calculate a fair price. We have several books on determining a business' value, but none of them are comprehensive. There are always certain types of businesses for which formulas are not provided.

I've come to like one resource in particular, because it does cover a wider scope of businesses. It hails from ValuationResources.com. Here's a link to a sample of their 2006 version (it's a PDF file, just so you know). Page 1 provides a basic review of some pretty simple formulas, while the remaining 8 pages list multiples for various SIC codes.

We have the 2004 edition in our collection, and plan on purchasing this 2006 edition very soon. Should you ask for a valuation formula in the future, it's very likely that data from this resource will be part - if not all - of the response.

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