Explain the asset-based, market and income ways of valuing a private firm and what bears on choosing each one

The income approach values a business from the economic benefits it is expected to produce, either by capitalising one normalised cash flow or by discounting a forecast, and suits companies with predictable cash flows or clear growth prospects. The market approach uses prices of comparable public companies or of past acquisitions, and suits businesses with good comparables. The asset-based approach sums the fair values of assets less liabilities, and suits holding companies, resource companies, very early-stage businesses, or those likely to be liquidated. The choice depends on the stage of the company, the nature of its assets, the data available and the purpose of the valuation. The trap is valuing a profitable business whose worth lies in intangibles on an asset basis.