For different stages of a business, there is always a different type of investor for it. For instance, if you are at the startup stage, you may need a startup angel investor. In the initial stages, you cannot show patented equipment or technology that has a quantifiable or logical value, nor can you show a historical P&L. So, the company valuation here is based entirely on the founder’s vision for the company, along with the value of that market category or segment of the offering, the assessment of the market need, etc.

These kinds of angels who lead in the earlier stages usually demand a percentage of the company that they want in exchange for the funding they are offering. They would create a terms sheet that would permit you to earn or purchase all the equity back based on their terms.

At the moment a company is about to be sold, there is a different group of experts who are needed for the company valuation. And of course, you would need all the financial documents, ideally those have been audited by the experts for your company. Moreover, the advisors for small companies could be consultants or brokers that are proficient in your sector. But if you have a big company, you would need investment bankers to help you in your deal.

These investment bankers usually have their own methods of valuation, protocols, formulas and would pitch you regarding their plan to assist you with a sale. This plan would also include their rough estimate to determine the valuation. As a matter of fact, it is crucial to have advisors who can assist you with both the investment value and the fair market value of your company.