Valuation Technique Question 1

Business & Finance
Tutor: None Selected Time limit: 1 Day

What are the various valuation techniques and the advantages of each as it relates to valuing a new start-up venture?

Oct 12th, 2015

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Discounted cash flow is a valuation technique that is applied in estimating investment opportunity attractiveness. As a tool it helps in calculating the fair pay for today investment for instance if an investor invest a certain amount of money how much will he get in future.

Multiple valuations is when a company is valued on market basis examples of multiple valuation techniques are price/earnings multiple which makes comparison between a company market capitalization and its annual income. Other multiple valuation is EBITDA multiple and earning multiple. The advantage of multiple valuation method is that it require one to look at the multiple used by other companies in the same industry.

Market Valuation is a technique established in an economic rationale of competition. According to this valuation technique in a free market the value of business properties are affected to a particular balance by forces of demand and supply. Advantage, the technique determines the asset appraisal value on basis of the price of a similar item.

Comparable transaction method used when valuing a company during acquisition or merging by looking into the transaction that has occurred in the industry which are similar to the ones under consideration. Advantage of the technique is that it help in knowing how much to value a company.


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Oct 12th, 2015

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Oct 12th, 2015
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Oct 12th, 2015
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