generally speaking there are

various

approaches to business valuation and

they they break down into essentially

three different approaches

one is let’s call it an asset approach

how much does the business own

um do they have equipment do they have

real estate

um

do they have

other assets vehicles

and then in that way it’s pretty

straightforward everything is valued and

you have a value approach

the other is called a market approach a

market approach

is how much would someone pay

to own your business or to buy your

business uh maybe the best way of

thinking of that is what if you had a

franchise what if you had a mcdonald’s

those cases are relatively easy there’s

a there is a market for the sale of a

franchise

um and it could be relatively easily

determined

the third way is what’s called an income

approach

income approaches how much does this

business make per year

maybe the business makes a million

dollars a year

so

what would someone pay for a business

that spins off a million dollars a year

and i i don’t get too technical but

there’s counter considerations

risk for example maybe you have a

business that makes a million dollars

um a year but it’s a very risky endeavor

or it’s very

tech forward and then there’s a

different technology that’s that’s going

to make it obsolete or maybe the

opposite is true maybe it’s a turnkey

operation that’s making a million

dollars for 20 years um so the so that’s

the income approach so there are those

three approaches generally speaking and

um depending upon the type of business

and the type of case and the

personalities involved in strategy

we generally speaking choose one of

those approaches and by the way when i

say we

the way it works is either you will have

a joint expert and there’s always going

to be an expert a forensic accountant

a joint means you both

hire that person and you agree for the

most part to

accept their recommendations or their

report the other way of doing it is have

your own expert and they the other

person has their own expert and then

there’s a battle or sometimes the court

appoints its own expert but there is

generally speaking

an expert involved

and that is how businesses are valued