What is company valuation?

Company valuation, also known as business valuation, is the process of assessing the total economic value of a business and its assets. During this process, all aspects of a business will be evaluated to determine the current worth of a company. Common reasons for performing a valuation are mergers & acquisitions, strategic planning, capital financing, and investing in securities. Several methods of valuing a business exist, such as looking at its market cap, earnings multipliers, or book value, among others. For example, market capitalization is the simplest method of business valuation. It is calculated by multiplying the company’s share price by its total number of shares outstanding.