Just came across a well written article in startup professionals blog by Marty Zwilling.Â Â Below are a few bullets points for those looking for a scientific method to an overall artistic experience.
- Place a fair market value on all physical assets (asset approach)
- Assign real value to intellectual property. â€“
- All principals and employees add value.
- Early customers and contracts in progress add value.
- Discounted Cash Flow (DCF) on projections (income approach).
- Discretionary earnings multiple (earnings multiple approach).
- Calculate replacement cost for key assets (cost approach).
- Look at the size of the market, and the growth projections for your sector.
- Assess the number of direct competitors and barriers to entry.
- Find comparables who have received financing (market approach)
The full article can be found here