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You've received a lot of answers to this question already, but the short answer is that it is a long story! The easiest way for me to respond is to direct you to a blog entry I wrote on the topic, which spells out the most common methods of valuation and their typical applications: http://www.stantonlawfirmllc.com/2014/11/a-diamond-in-the-rough-how-should-i-value-my-business/
Let me know if you want to chat!
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