How do you find out the value of a company?
Answer:
Very difficult because there are so many variables. Turnover, net profit, stability of market, barriers to entry, available workforce, working capital required, competition, patents, payment terms, others. For a small business, it's usually between 2 and 5 times the net profit, but this is hugely variable. If you are looking into buying one, hire a good accountant and a business analyst. They don't cost the earth and could save you a lot, even if it means you don't end up buying the company you thought was the best thing since sliced bread! Be very careful of business brokers, as they work for the seller only, not you.
Two quick answers:
Assets - Liabilities = Book Value
Number of stock shares outstanding X Price of stock per share = Market Value
A more expensive answer is you hire a consultant
See the answer below about assets, liabilities - and to find out what these are you need to download the company's latest set of statutory accounts from the companies house website in the UK. (assuming it is a uk registered company). Any more detailed and you do get into the realm of the consultant - there are many valuation methods
ask the chairman
Try and buy it!
Normally there are two values. Book value i.e. as per the financial reports, which gives the value in accountancy terms, which doesn't reflect the true market value.
Book value = assets - liabilities
2. market value - if u want to buy a company then this value is the key. = number of stocks in market (Assuming public listed company) x market price
Market price u can get from bloomberg, or finance.yahoo.com. And number of shares outstanding also u can get from finance.yahoo.com.
In acquisitions u take market value of these comapnies and add a bit of premium and make acquisition. check out damodaran website (search damodaran on google - he is the guru of valuation - New York University MBA professor)
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