How much is a company worth? First consider what kind of company it is - startup; fast growing; mature; or declining. Each phase of a company's life cycle requires different methods of valuation. The hardest companies to value are in the startup phase. They are private and often have scant history of valuation for fund raising. So, in these cases, look at four aspects of the company:

First, is there a Visionary - someone who knows where the market is heading and understands how to leverage that knowledge into revenue? The visionary also has to have communication skills to articulate the company's vision, and raw passion to get things done to execute his vision.

Second, is there cohesiveness in the company's workers? This is usually seen in descriptions of the workforce containing phrases such as "shared vision", "common goals", "singular passion", etc. Can each worker articulate what the company is trying to accomplish?

Third, is there something unique about the product or service that makes it hard to copy. (Groupon had a great idea, but within months they were copied by Living Social and now by Amazon. Groupon appears headed for the dust-bin unless they create a new product or service.) One common form of recognizing (and protecting) uniqueness is a patent (or patents). Are the patents provisional (not much protection as they haven't been reviewed by the patent office), pending (under review), or issued (approved by the patent office).

Fourth, is the company spending its money wisely? Someone once told me that a tipping point into failure is when a company buys custom furniture for all their offices before becoming profitable. While there are exceptions, that is a good illustration of taking one's eyes off the goal of creating a healthy, lasting company.

-Don Burtis