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How to Value an SME—An Introductory Guide

Valutico

Key methods include the Income Approach, which estimates future cash flows, the Market Approach, comparing with similar businesses, and the Asset Approach, valuing tangible and intangible assets. Lastly, determining the continuity value (or terminal value) is a subjective process that often leads to disagreements.

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How to value SMEs: A Simplified Roadmap

Valutico

The challenge with this approach when valuing SMEs is finding comparable businesses due to their unique characteristics. Asset-based Approach : This method functions like an inventory check, summing up a company’s tangible and intangible assets and subtracting liabilities, resulting in the company’s net asset value.

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M&A Valuation Methods: Your Essential Guide with 7 Key Methods

Valutico

Analysts use financial metrics and multiples such as Price to Earnings (P/E), Price to Book (P/B), Enterprise Value to Sales (EV/Sales), Enterprise Value to EBITDA (EV/EBITDA), and Price to Book (P/B) ratios derived from trading data of similar public companies or deal pricing data of similar M&A transactions.