A business value can only be determined in the real world through a negotiated price and sell structure between an actual buyer and a seller. However there are three methods commonly used by accountants, lawyers and M&A specialists to value a business: (1) asset-based (2) income based (3) industry comparisons.
In addition each prospective buyer is likely to have their own proprietary method for evaluation acquisitions.
But one of the commonly used approaches is to multiple the estimate cash flow from your business times a suitable sale multiple for your business. The cash flow is determined by adjusting the reported profit in your financials for interest, taxes, depreciation and amortization and any excessive owner related expenses.
The multiple is determine by the industry or industries in which the business operates, adjusted for the readiness and attractiveness of the business to be sold.