When valuing a business using the discounted cash flow method, residual (or terminal) value can be a major part of the valuation puzzle. Business valuation experts typically consider the capitalization of earnings method and the market approach when estimating residual value. Either (or both) may be appropriate, depending on the nature of the business, purpose
business valuation Archives - Crawford Ellenbogen
Jun 29, 2022
Measuring residual value for the discounted cash flow method
- By Joan Ellenbogen
- Valuation
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Feb 8, 2022
Close-up on the cost approach
- By Joan Ellenbogen
- Valuation
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The cost approach to valuing a business starts with the book values of assets and liabilities reported on the balance sheet. However, book value is based on historic cost, rather than current market value. Plus, certain items, such as internally generated intangible assets and contingent liabilities, may not be reported on the balance sheet. So