Valuation is the process of determining the economic value of an asset or business, commonly conducted when:
- A business is selling part or all of its operations.
- A business is merging with or acquiring another.
- Fundraising, to decide the equity portion in exchange for capital.
- For tax or financial reporting purposes.
Various methods, including Market Capitalization, Earnings Multiplier (P/E ratio), Discounted Cash Flow (DCF), Book Value, and Comparable Company Analysis (CCA), can be used. The method chosen depends on the business's nature, development stage, and the valuation purpose.