Business valuation

business valuation calculation

How to Calculate Business Value?

You might prefer to state the value of your business on your own terms, of course, but anyone looking to buy your business will definitely want to know how much your business is worth and use the best business valuation calculation, seller’s discretionary earnings to achieve the best results. In addition, how an objective party would value your business by using the income approach alone among other methods, based on a pre-set series of determinations that more accurately calculate the business value by finding the kind of return they can expect to see on the investment. As you figure out the best way to sell your business in California, there are several strategies to calculate your business value quickly, increase your company’s value, and get a certified business valuation professional on your side. As business owners looking to retire, we have answered a very common question that most ask: “what is my business worth?

That said, potential buyers aren’t the only ones who will require business valuations. You may also need a business valuation if you want to:

  • Obtain financing for your business
  • Settle a Shareholder Dispute or reach a Shareholder Agreement
  • Determine the value of your business for a divorce settlement
  • Open an Employee Stock Option Program (ESOP)
  • Plan your estate or gift taxes
  • Put in an insurance claim
  • Successfully navigate litigation against your company
  • Conduct a merger or a partnership buyout
  • Convert from a “C” Corp to an “S” Corp
  • Allocate a Purchase Price
  • Create a Valuation Report

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Three basic types

Different Type of Business Valuations

Every potential transaction requires a different type of business valuation, and some can be quite complex, but in broad terms, there are three basic types:

1. Brokers Opinion of Value (BOV)

If you are the owner of a business considering a sale, you’ll most likely want a Brokers Opinion of Value. This report brings together a Most Probable Selling Price (MPSP) for the business by using three valuation methods – Market Data, Income, and Cost or Asset Approach. This will give you a starting point for setting a price on your business for sale.

Click this link to see a sample Brokers Opinion of Value.

2. Calculation Of Value or Short Report

In non-litigation situations where you need to determine the selling price of your business, such as in the case of entering into a Buy-Sell agreement with a partner or shareholder, you’ll want a business valuation calculation called a Calculation Of Value or Short Report. This is a restricted-use abbreviated report that gives a formal summary that allows all parties to agree on a selling price.

3. Conclusion of Value or Full Report

In legal situations, you will want a Conclusion Of Value or a Full Report. If you are dealing with a court of law or the IRS, this report is suitable for litigation support and review by third parties. It explains in a step-by-step manner exactly what was done to determine the value of the business.  It also explains ‘why’ or the reasons for arriving at the value.

A qualified appraiser with experience in all aspects of business valuation and business transfers performs each of our businesses. The Conclusion Of Value or Business Appraisals from Rogerson Business Services is in compliance with:

  • Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP)
  • Business Appraisal Standards of the National Association of Certified Valuators and Analysts (NACVA)

Compliance with these industry standards ensures that proven peer-reviewed valuation methods are used and that the valuation meets the highest standards of the industry. This is to your advantage because it means your business valuation or appraisal includes a defensible opinion of value that makes it very difficult to dispute in legal situations.

Get in touch today to talk about your business valuation needs. Andrew will be happy to help you, in any way he can.



    5150 Fair Oaks Blvd, #101-198
    Carmichael, CA, 95608-5788


    Phone: (916) 570-2674
    Fax: (916) 473-8655


    Buying or selling a business is a complex process – and you shouldn’t go through it alone. You need an experienced business broker to guide you through the process.

    We make buying and selling businesses simple and straightforward. We’re qualified to handle the most complicated aspects on behalf of our clients, ensuring you walk away satisfied.