Glossary · Reading the business
In short
This is a valuation method that estimates a business's value based on its expected future income or cash flow, converting it into a present value. It's a key method for valuing profitable businesses.
Appraisers often use income capitalization to determine the fair market value of a business, especially for service-based companies or those with consistent earnings. You'll see this method in the appraisal report. It helps justify the purchase price by demonstrating the business's ability to generate future returns and cover debt service.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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