Business Valuation 101: Approaches for Valuing Private Businesses

Performing a valuation of a publicly-traded company is fairly straightforward. When a company’s stock is actively traded on an exchange, the market sets the price and the transaction can be completed in a matter of seconds. A privately-held company, on the other hand, is a different story. An evaluation of a privately-held company requires financial models, investment and return expectations, and ownership constraints to establish an opinion as to what the market may pay.