How to Select a Valuation Method
BojanFin.com · 2026
"The correct valuation method depends jointly on a company's lifecycle stage and the purpose of the valuation — the same startup might be valued by the Berkscore method when raising funds and by a DCF when being acquired, because different purposes demand different assumptions."
There's no single 'correct' way to value a company. The right method changes depending on why you're valuing it and how mature the business is.
The framework crosses two axes: company lifecycle (startup through decline) against valuation purpose (selling, buying, funding, taxation, restructuring). A startup being funded typically uses the Berkus method (qualitative risk-factor scoring, since there's no revenue history to model). A mature, stable company being sold might use EV/EBITDA multiples. A company in decline being liquidated defaults to net book value or price-to-book, since going-concern methods like DCF stop making sense once the business isn't expected to keep operating.
Why would a pre-revenue startup typically be valued using the Berkus method rather than a DCF?
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The explanation above is written with AI assistance. These are the originals — go to them to check it.
- How to Select Valuation MethodBojanFin.com (Financial Modeling and FP&A Program)
EBITDA, Decomposed
"EBITDA strips out financing structure, tax jurisdiction, and accounting depreciation choices to expose a company's core operating performance — which makes it useful for comparing companies fairly, but only if you separately track the real cash flow and capital expense risks it deliberately ignores."