The valuation of a business is not so simple as someone buying the business for an amount equal to its net worth. Business valuation usually takes into account the net worth reported in its balance sheet, but many other factors play a role in putting a value on a business. The amount a buyer is willing to offer for a business can be considerably higher than the companys net worth based on the figures reported in the companys most recent balance sheet. The valuation of a privately owned business is quite a broad topic, which is beyond the scope of this book. Likewise, the valuation of stock shares of publicly owned business corporations is a far-reaching topic beyond the confines of this book. (more…)
