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Private company valuation experts distinguish three major approaches to valuation: 

Income approach

The income approach values a firm as the present value of its expected future income. Such valuation may be based on a variety of different assumptions and variations

Market approach

The market approach values a firm using the price multiples based on comparable firms or multiples based on recent sales of comparable assets. 

Asset-based approach.

The asset-based approach values a firm based on the values of the underlying assets less the value of any related liabilities. 

Each major approach and its variations are applicable in specific situations and require a thorough consideration of the underlying assumptions. A proficient valuator can discern the appropriate approach and methodology within that approach, utilizing relevant and justifiable data and calculations to produce a valuation estimate. As mentioned in our valuation philosophy section, we supplement our in-depth quantitative analysis with an equally robust qualitative analysis.