After selecting the appropriate approaches and methods, the appraiser typically adjusts the value indications to reflect the relative lack of marketability of closely held businesses as compared to liquid and readily marketable public counterparts. The values calculated based on the various methods are then reconciled to provide an indication of value or an estimated value range for the company.

Business valuation can be a bit of a dry and technical topic. However, this provides entrepreneurs with an overview of the basic methodology used by appraisers in most company valuation scenarios, so that it doesn’t look like a “black box.” To be sure, there are other valuation approaches and rules of thumb out there and when analyzing a startup and early-stage companies, a great deal of adjusting and intuition/judgment are necessary to estimate company values.