As a Colorado business broker, I often hear sellers lament that selling an existing business in today’s economic climate is a losing proposition. But the truth is, selling a business is not the same as selling a piece of real estate; the value of a business depends on a lot more than the current economy, and the method of business valuation that you use.
Any broker will tell you; business valuation can get quite complicated. A business broker uses financial tools and advisors to apply specific calculations to the company’s gross revenues, cash flow, and annual growth depending on the type of business it is. Then, the assets of the business are valuated separately. These include the physical property of the business, if owned, plus equipment, inventory and financial assets.