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There are five things that should be taken into account when determining the value of a business. Those five things are performance in the future, the amount of financial leverage it has, what the expectations are for financial return, instead of profits; cash flow, and the structure of deals. We’ll look at each of these things in turn.

1. Performance in the Future

While most people look at the past history of a business, the thing that really helps to determine value of a business is what the business will do in the future. The history of a company is helpful and shouldn’t be discounted, but not every business owner does things the same way. Therefore, the past performance is a guideline but is by no means completely accurate and infallible when it comes to determining what will happen in the future.