How to Calculate Per Share Value for an S Corp


If you're interested in investing in an S corporation, you should make sure you're getting the right number of shares for your money. Of course every corporation and every investor is different, but there are some general principles that can help you determine the value of the shares you're purchasing.

Calculate the total value of the corporation. Corporations are complex entities and nobody can say for sure what one is worth, but there are a number of methods that are commonly used in the business world to arrive at an estimate. One simple method is to look at the corporation's balance sheet, then add up the corporation's assets and subtract its liabilities. This figure is called the "book value" of the corporation.

Adjust for other factors. For example, if the company is about to launch a product that you think will be a huge success, you may value it more highly than if you think the product will flop.

Determine the number of outstanding shares of the corporation. You will need to check the corporate charter and other documents filed with the state in which the company is incorporated.

Divide the value of the corporation by the number of outstanding shares. This gives you the value per share.

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