For the entrepreneur, often the founder of his business, which he has made grow and to which he has dedicated his life, his company is like a child. and generally tends to have an inflated expectation of its value due to the subjective conditioning factors involved.
That is why we recommend that, if you are thinking of selling your company, put yourself in the buyer's shoes, because he will see things differently. His main thought will be: "If I pay all that for the company, how can I make money?
In any case, a buyer will use one method to show that it is worth a little and a seller will use another to show that it is worth a lot.
But there are more reliable and accurate methods than others, the most widely used being the Discounted Cash Flows method, since it is the only one that answers the most relevant question when evaluating a business, which is how much cash it can generate in the future. Even so when valuing to negotiate a company sale and purchase, all methods are valid if they serve to rationally support a negotiation, given that at the end of the day, a company is worth whatever someone is willing to pay for it.
But if you want to sell well the work of many years, you will be interested in valuing your company in the most serious and professional way possible, in order to have solid grounds to defend its true value.
