Business Valuations [Methods and Approaches]

The three top associations for valuation professionals — the American Society of Appraisers (ASA), the Institute of Business Appraisers (IBA), and the National Association of Certified Valuation Analysts (NACVA) — agree on three major approaches to business valuation:

• The Asset Approach  
• The Market Approach
• The Income Approach

Although you may never put pen to paper [or finger to calculator] in working business valuation’s mathematical and analytical formulas, you want to understand them, particularly if you’re working with a qualified expert. No two businesses are exactly alike, even those in the same business operating across the street from one another. Having said that comparing similar companies can help you identify efficiencies and best practices that boost long-term value. Larger, more complex companies — and the increasing number of companies that consider intangible, intellectual assets the number one source of their value — may need to apply slightly different valuation methods and non-numerical analysis to get to the bottom of things. Not all companies need to go through a detailed valuation process. Generally, the smallest of small companies (businesses with less than $1 million in annual revenues is a guideline most valuation experts agree on) can rely on database information and rule-of-thumb measurements that go a long way to setting a range to negotiate price on any business.

http://accounting-financial-tax.com/2009/11/business-valuations-methods-and-approaches/

How to value a young startup?
http://blog.qrce.org/how-to-value-a-young-startup/