I\u2019ve spent over 15 years immersed in the world of business valuations\u2014probably more time than any sane person should. With a PhD in accounting and a dissertation (plus a good chunk of my research) dedicated to valuations, it\u2019s safe to say I\u2019ve geeked out on this topic more than most. So when a business owner asks me, \u201cWhat\u2019s my business worth?\u201d I get genuinely excited\u2014it\u2019s like asking a chef about their favorite dish!<\/p>\n
In this post, I\u2019m going to give you the correct answer<\/strong> to this big question (most articles\/videos on the topic don\u2019t). Then, I\u2019ll break it down into a simple rule of thumb<\/strong> you can use for a quick ballpark estimate. Let\u2019s get to it!<\/p>\n When it comes to figuring out what a business is worth, the answer boils down to this: the present value of its expected future cash flows<\/strong>. But what does that mean, exactly? Let\u2019s break it down into three key parts: cash flow, future expectations<\/strong>, and present value<\/strong>\u2014all explained in simple terms.<\/p>\nThe Correct Answer<\/h2>\n