How Do I Value My Stake in a Business?
We own a security fencing company and a solar technology company. I was trying to figure out what my portion of the company would be worth. I own 8 percent of each company. What's the best way to calculate that? What factors do I need to consider? Are there any resources you'd suggest?
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.One thing you can do is look into valuation, valuation methods and valuation professionals. Do a web search for "valuation" and see what you turn up for fencing and solar energy. There's probably a formula based on some multiple of annual revenues, but those formulas are always pretty general. They might just be a starting point.
There are professionals who can help you. The problem is that valuations can go all over the map, depending on which formulas are used.
If you have a small business attorney you trust, or an accountant you can trust, they might be good resources. Also, consider taking the problem to one of the more experienced people at the nearest Small Business Development Center. You can find out more about them here.
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