Seasoned professionals know this little known fact.  Valuing a business is not completely a science neither is it completely an art.  While there are many known and time tested method of valuing businesses, at the end of the day there are a lot of subjective elements that play a huge part in the valuation process.  Several sophisticated methods can be used to estimate potential business valuations but finally it all come down to what the buyers are willing to pay.

Now let us look at the few methods of business valuation that are out there.  One of the common approaches to valuing a business is the income approach.  Under this approach the valuation is based on future discounted income of the company.  This method relies on the accuracy of cash flow projections and will depend on the market conditions that will prevail.  While a financial investor can feel good about knowing the returns the business will provide, in some industries this can be hard to predict.  How many of us would have predicted the current financial meltdown we are experiencing and its impact on income & cash flows?

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