Valuation methods for business valuation: an overview

Why combine multiple methods?

There is no 'perfect' valuation method. Each approaches value from a different perspective. By combining and weighting multiple methods, you get a more robust and defensible valuation.

Both the IBR-IRE and ITAA emphasize that relying on a single method is risky.

Income approach

The income approach values a company based on the future cash flows it generates. It is internationally recognized as one of the most reliable methods.

The advantage: transparent and defensible. The disadvantage: requires reliable forecasts about the company's future performance.

Market approach

The market approach derives value from comparable companies — listed peers or recent acquisition transactions.

The challenge is finding truly comparable companies in terms of sector, size and market positioning.

Asset-based approach

This method starts from the balance sheet: equity is adjusted for differences between book value and fair value of assets. Especially relevant for asset-heavy companies.

Belgian market data

For Belgian SMEs, it is essential to work with local market data. VARE integrates proprietary Belgian data for a valuation that reflects the local reality.

Classic goodwill methods

Classic European goodwill methods are still used in Belgium in academic and judicial contexts. VARE supports these as supplementary reference points.