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Question added to topic Grow Your BusinessJuly 28, 2011

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?
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.

Related: How to Value Your Startup
Related: Investment ROI Calculator
Tim Berry is the president of Palo Alto Software Inc., based in Eugene, Ore., which produces business planning software. He is also the author of 3 Weeks to Startup and The Plan-As-You-Go Business Plan, published by Entrepreneur Press.

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