The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:
The value of a company needs to be determined for commercial reasons, for example when the owners intend to sell the company. The main valuation methods are:
These are discussed below.
The capitalised earnings basis of valuation is probably the most commonly applied technique in valuing private company shares.
The formula is:
Future maintainable earnings x Price / Earnings (P / E) multiple
Future maintainable earnings are determined as follows:
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