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What are the best valuation sources for new companies?

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5 answers

Hi,

As per me, the best valuation source or asset for any company is employees.

If employee is happy, he will serve customer best.

The money you can borrow from the bank but loyal employee cant be borrowed or purchased.

You need to invest time to find and hire and care for these people.

Tarannum

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Not sure I understood your question. If you are talking about how to value a company (estimate its money value), then for a new company, forecasting future cash flows are a good source of valuation. This, of course is very subjective since some people may see greater future value than others. To give you an example, in 2006, Yahoo offered 1B for Facebook, but Zuckerberg didn’t even consider the proposal. He trusted his valuation more than anyone else. He was right. Let me know if you were referring to this. Regards, Omar

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What Omar said. The method is seemingly simple: 1. add forecasted cash your business will generate each year, subtract expenses. This is your cash flow in year X 2. in theory, cash flow of a mature business stabilizes eventually so you should put a lot of thought in forecasting first handful of years and try your best at guessing when the cash flow stabilizes 3. discount your cash flows in each year back to present. Boom, this is how much your business is worth

The trick is, of course, to forecast cash receipts and expenses. Small / disruptive businesses are notorious for missing the forecasts and when they come pretty close, that's by accident=) Another method is to look at what similar businesses were sold, but the information is scarce (those deals are typically private) and unreliable (not all the details of such deals are disclosed). Again, you have to apply judgement to pick comparable companies, and for a company trying to disrupt a market there may be none. Facebook is an excellent example.

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No, No--> No I meant, Online Valuation Calculators }| You can google it: "Online valuation calculators" There are 100's of them!

Which one is the best.?

Thank you for your uplifting reply.

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