Business valuation is an important aspect particularly for small and medium sized businesses, yet most business owners and managers in privately held companies don't really know their business's value. Without this information, an owner or manager cannot make an intelligent decision about what the business is actually worth, which is information if the business wants to borrow money or has been approached by a potential investor.

Module Objectives

The objectives for this module are for students to be able to:

Explain the common reasons for calculating the business's value
Discuss key buyer and seller questions
Calculate business value using Gross Revenue Multiplier
Calculate business value using the Discounted Cash Flow method
Calculate business value using the Price Multiple method
Calculate business value using the Liquidation Value method
Explain how and when to apply discounts and/or premiums in calculating a business's value
Explain how the methods are combined to form a single estimate

Content/Activities

Before Class:

Read this: Key Reasons for Buying or Selling a Business
Watch this: LinkedIn Learning video "Business Valuation" by Jim and Kay Stice
Read this: What you must know about business valuation

During class:
In-class valuation and DCF Exercise: Business valuation in-class exercise and examples - student.xlsx
Simulation Practice Rounds 6,7,8

Assessment

Complete the Pre-Class Quiz. This is a graded assessment worth 15 points.