Just like anything else, the value is what you think others are willing to pay. It's just that for companies, the market is highly illiquid so you don't know ex

Just like anything else, the value is what you think others are willing to pay. It's just that for companies, the market is highly illiquid so you don't know exactly how much a company is worth until someone bought it, be it an acquirer or a stock exchange market. Of course, this won't help you on a practical way, but it helps explain why it's not something with a simple formula. To value a company, you need to consider what stage they are in. Early on, you are valuing the team more than anything else and there are simplistic formuals like the Scorecard[1] method. For SaaS companies, valuation is sometimes expressed as a multiple (typically 5x) of ARR, but again that depends on the stage and the domain. But overall, it's what you feel comfortable it is worth. [1] http://worthworm.com/valuation-methods-spotlight-on-the-scorecard-method/ http://worthworm.com/valuation-methods-spotlight-on-the-scor...