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What specific factors come into play when a business's value is considered?

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There are a number of factors that enter into the mind of an appraiser or company when a business is valued. For example, the percentage of ownership within a business can have a large impact on the value since the ability to buy multiple parties outright at a common price is not always a safe and secure reality.

Also, a controlling interest is usually estimated at a much higher value than a minority interest is since a minority interest holder can not usually sell underlying company assets or other means of fiscal compensation. Most business appraisers determine if there is a probable discount acceptable for factors such as these throughout the Business Valuation process.

Another important factor is if a corporation or company is public or not, which falls into the realm of marketability. A company involved in the stock market, in which all company stock is publicly traded, is often valued as extremely marketable as it would only take three days to convert it into cash.

A prime example of the opposite of marketability would be to use the example of minority interest again. Again, the appraisal process must always keep in mind the possible discounts afforded for control and marketability if either or both are absent.

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