Valuing a Business or Earnings Stream

This note provides an overview of business valuation techniques. The discounted cash flow method is described in a simple six-step process. A numerical example is also provided. Other valuation methods are briefly discussed, including the price-earnings approach, break-up value, and an acquisition premium approach. This note is ideally suited for an executive audience. (A more in-depth note in this area can be found in "A Note on Mergers and Acquisitions and Valuation", case number 9A95B023.)