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Valuing an entrepreneurial enterprise

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  • David Audretsch
  • Albert Link

Abstract

This paper focuses on valuation issues and methods that are related to a closely-held entrepreneurial enterprise. This focus is motivated by the fact that the number of small closely held business start-ups, which we refer to broadly by the term entrepreneurial enterprises, continues to grow year after year, and new business ventures remain the primary source for employment growth in the United States and most industrialized nations. And, the topic of the valuation of an entrepreneurial enterprise has for the most part been ignored. The traditional approaches to the valuation of small closely held entrepreneurial enterprises are, in our view, wanting in a number of important respects. Simply, traditional valuation methods are modeled in a manner that is applicable to a going-concern business with a history of sales and revenues. That is not the case for an entrepreneurial enterprise as we define it, and thus the use of traditional valuation methods is questionable.
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Suggested Citation

  • David Audretsch & Albert Link, 2012. "Valuing an entrepreneurial enterprise," Small Business Economics, Springer, vol. 38(2), pages 139-145, February.
    • Handle: RePEc:kap:sbusec:v:38:y:2012:i:2:p:139-145
    DOI: 10.1007/s11187-011-9409-5
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    References listed on IDEAS

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    1. Reynolds, Paul D. & Curtin, Richard T., 2008. "Business Creation in the United States: Panel Study of Entrepreneurial Dynamics II Initial Assessment," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 4(3), pages 155-307, January.
    2. Zoltán J. Ács & Pamela Mueller, 2015. "Employment effects of business dynamics: Mice, Gazelles and Elephants," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 16, pages 304-319, Edward Elgar Publishing.
    3. Audretsch, David B. & Link, Albert N., 2012. "Valuing an Entrepreneurial Enterprise," OUP Catalogue, Oxford University Press, number 9780199730377.
    4. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
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    Cited by:

    1. David Audretsch & Albert Link, 2012. "Entrepreneurship and innovation: public policy frameworks," The Journal of Technology Transfer, Springer, vol. 37(1), pages 1-17, February.
    2. Karl A Koehler, 2017. "Inducing phase transitions in local innovation networks: Implications for state economic development," Local Economy, London South Bank University, vol. 32(8), pages 854-866, December.
    3. Audretsch, David B. & Link, Albert N., 2012. "Valuing an Entrepreneurial Enterprise," OUP Catalogue, Oxford University Press, number 9780199730377.
    4. Hayter, Christopher S., 2016. "Constraining entrepreneurial development: A knowledge-based view of social networks among academic entrepreneurs," Research Policy, Elsevier, vol. 45(2), pages 475-490.
    5. Niccolò Ghio & Massimiliano Guerini & Erik Lehmann & Cristina Rossi-Lamastra, 2015. "The emergence of the knowledge spillover theory of entrepreneurship," Small Business Economics, Springer, vol. 44(1), pages 1-18, January.

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    More about this item

    Keywords

    Entrepreneurship; Valuation; Closely held business; L26; O31;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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