Small business owners that need to ascertain the value of their business often find themselves sorting through a range of confusing concepts and methods. A confusing process becomes more frustrating without an understanding of the key terms, like business comps or capitalization rate, that are employed in the business valuation field. Here are six of those terms defined to help make the process somewhat smoother.
- Business Comps: Business comps refer to the product of comparison between revenue and expense in the current year to that of the previous year.
- Capitalization Rate: More often called the cap rate, this is the net operating income of a business or property divided by the property value. The property value is what a certified business