Business and 409a Valuation Calculator
Need to check your company’s worth? Eqvista’s business valuation calculator can help you determine the approximate value of your business.
Once you have entered your company’s information, you can view the total value of your company. The graph would break down the total value based on each valuation method. Checkout our Business Valuation Calculator-User Guide for more details.
Disclaimer: This business valuation calculator is for information purposes only. Use of this calculator is at the own risk of the Preparer, and they take full responsibility for the provided inputs, assumptions, and calculations of the report. Eqvista Inc. assumes no responsibility nor liabilities for any consequences from the calculated results and provides no assurances of the applicability or accuracy of the valuation results for your company. Eqvista has no obligation to defend or represent any part of the assumptions or calculations used or results from the business valuation calculator, and should be taken “as is” without warranty of any kind. The results of the valuation calculator do not provide “safe harbor” status for IRC 409a purposes and do not serve as an independent qualified appraisal or valuation opinion.
Important Terms to Know
To understand how the process of the business valuation calculator works, here is an overview of some of the terms we use:
- Industry – The industry is a group of companies that are related based on their primary business activities. Companies are normally classified into an industry based on the services/products they are offering.
- Years in Business – This is the number of years that the company has been in business. It is also referred to as Year-Over-Year (YOY), which is a frequently used financial comparison for comparing two or more measurable events on an annualized basis. This is used to see if the company’s performance is improving, static, or worsening.
- Common Shares – Common stock is a security in the company that represents the ownership in the company. Those who own the common stock in a company have the right to vote and receive the profit earned by the company based on their ownership.
- Total Assets – Total assets are all the assets that the company owns including things like machinery, capital, buildings, patents, trademarks, and so on. It can be anything the company owns. All these together make the total assets of the company. This is mainly used in the Asset-Based Approach for valuations.
- Total Revenue – This is the amount of money that the company earns by selling its goods or services. There are different kinds of revenues including gross revenue and net revenue, which are combined to get the total revenue of the company.
- Total Profit – Total profit of a company is how much money the company has left over after they deduct the company expenses. In short, it is the percentage of the total revenue that the company retains.
- Future Growth Rate – This is the predicted growth rate of the company in the future. This future growth rate would affect the company’s future revenue and profit. For startups, this figure may be high, whereas, for more established companies, the growth rate may be low.
Everyone’s company has value as soon as it is incorporated. For instance, when you register a company with $1,000 in cash, the company is worth $1,000. And as things are added to create the business, the value increases.
- What is a Company Valuation? – A business valuation is a general process where the economic value of the whole business is determined. The business valuation calculator can help in getting the fair value of the business for many reasons, including taxation, establishing partner ownership, sale value, and even divorce proceedings. Different methods are used to evaluate a business and get the value at which the company can be sold.
- Why is it important to evaluate your business? – There are many reasons to get your company valued. But one of the main reasons is when a business wants to sell a portion or all of its operations. Another reason to get the value of the company is when you want to acquire a company or merge with another company.
- How to calculate the value of a business? – The process to get the value of the business includes valuing all the aspects of the company and using objective measures. The valuation method can vary based on the businesses, valuators, and industries. But there are a few common methods that work for all, including discounted cash flow models, similar company comparisons, and the review of the financial statements.
Methods of Company Valuation
When valuing a company, there are multiple different kinds of small business valuation methods that can be used. There are methods including the earnings multiplier, discounted cash flow method (DCF method), book value, and liquidation value. These are just a few methods mentioned. But there are three main methods that are the most common:
The income approach is one of the most popular used small business valuation methods in which the business is valued at the present value of its future earnings or cash flows. This value is then adjusted according to the changes in the cost structure, taxes, growth rates, etc. The business’s current value is found using the discount rate that reflects the required rate of return for an investor.
This method is very robust as it does not depend on any of the transactions in the market. In fact, this method also has many sub-methods (the way in which the value is calculated). To understand more about the income approach, check out the article here!
The second method is the asset-approach business valuation method. It is one of the best ones as per many evaluators—the reason why is that this considers the total value of the assets that the company owns. Assets here can be both intangible and tangible. And the value of the tangible assets can easily be obtained from the company’s books. But for the intangible ones like the patent, trademark, and so on, additional methods are used. To understand this approach better, check out the article here!
The third small business valuation method used is the market value approach. This is one of the most commonly used methods. In this method, a value is assigned to the business based on the market forces of comparable companies in the market (can be public or private), and a multiple is given to the company based on one of its financial measures. This can be a revenue multiple, profit multiple, EBITDA multiple, asset multiple, and others. To understand more about the market value approach in detail, check out the article here!
Get Your Company 409a Valuation from Eqvista
Using our business valuation calculator would help you get an idea about the worth of your business. However, if you want to price your company (and your shares) for something more official like taxation or other purposes, you will need to get a professional to help you with the 409A valuation. Eqvista can help you with a 409A valuation for your company using business valuation methods and ensuring that your valuation is audit defensible.
Get your company 409A valuation from experts at Eqvista. We perform high-quality business valuations for our clients at a price they can afford. Here is why we are your best choice:
- We offer a straightforward process as we understand your company the best way to go about your valuation. Then take the needed documents, draft a report and complete the 409A valuation process.
- You can rely on us as the company valuation is performed by expert appraisers who use widely accepted small company valuation methods and comply with safe harbor standards. Our team is NACVA certified, which means that experienced professionals and accredited experts would handle your case.
Contact us today to get your business valuation done or to just check what your company is worth with our 409a valuation calculator!