# Valuation

What a business is worth to a buyer, stated as a price or a range.

The word names an opinion produced by a method, and the method is what a buyer argues with. A broker's asking price, a lender's appraisal and a buyer's own model can all be called the valuation of one business, and they land far apart. Each answers a different question: what the seller hopes for, what an institution will lend against, and what the earnings support once the owner's work is paid for. So ask which method produced any number you are shown, and what it assumed goes with the business. A valuation of the assets and a valuation of the earnings are not two estimates of one thing.

In numbers: A business with $1.5M of [SDE](https://searchspheresource.com/glossary/sde) is a $4.5M business at 3x and a $6M business at 4x, and which of those it is decides whether the deal is financeable.

Source: https://searchspheresource.com/glossary/valuation
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt