How to value a company

Say you're lucky enough to find a potential investor in your young company. At some point the guy ought to know: "How much do I have to pay --and how much can i get? "

To find out how much a company is worth can be tricky, but you need to find out how it can be done, especially when investment capital is stubbornly hard to find.

These are a few techniques to help you how to find out how much a business is worth. When it comes to impressing investors, you can to communicate in their language.

Method Number 1: Utility Valuation
Of all value techniques, the asset approach--placing dollar values on most of the assets on a company's steadiness sheet and combining them--is the most specific and crucial one to value a company.

Approach No. 2: The Sector Approach
Another way to consider valuation is by estimating a company's earning potential influenced by theoretical demand in the market.

Method No.3: Income Valuation
The method, used broadly by financial analysts, involves calculating a company's future cash flows and discounting them to know their value in present dollars. But: With very new companies, this approach may not bevery useful.

Here you will find more specific information about those methods to value a company.