When determining a value for a company, is it permissible to use a multiple instead of a long, formal valuation?

Q: When determining a value for a company, is it permissible to use a multiple instead of a long, formal valuation?

A: Merely using a multiple is not a practice that is allowed by the IRS or other valuation professionals. An arbitrary multiple (such as 3, 4or even 7) used against an arbitrary number such as tax profits or financial profits will yield another arbitrary and useless number. To get a good, solid value, a business owner must rely on trained professionals to get a value that is acceptable and defensible.