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Determining Your Company's Value

If you want to get the right valuation for your business, be sure to find the right valuation expert for the job.

This story appears in the February 2006 issue of Entrepreneur. Subscribe »

There comes a time in the life of every small business when its owner looks up momentarily from the daily letting of blood, sweat and tears to ask the question: Just what is this thing worth?

Whether you're considering selling the business, recruiting new investors, bringing employees into ownership or gifting the business to heirs, a business valuation can help you put a more precise number on its present and future value. But the valuation of a privately held business--particularly a small company that may not have a lot of comparable statistics in its industry to look at--is an imprecise science based partly on hard numbers and partly on soft figures, such as cash-flow projections and other intangible assets and subjective criteria. How, then, can you be sure you're getting a fair number?

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