Valuation of a venture deals with all of the mess, uncertainty and possibility that a company’s future holds, and tries to reduce it down to a single numerical figure – its valuation.
Given how incredibly difficult forecasting the future is, investors and buyers will tend to gravitate to certain valuation ‘anchors’. As a company owner, it is critical to understand them, as these anchors can determine, in large part, how the discussion and negotiations around value will be framed.
The main ones are:
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