There are two approaches that are primarily used when valuing a business as a possible acquisition candidate Discounted Cash Flow Approach, and Dividend Discount Approach Both methods are used to value a Target based on the amount of income the company is expected to generate in the future Premised on the risk-return concept Requires estimation of expected (i.e.future) returns Requires analysis and estimation of risk inherent in expected returns (i.e., estimation of a risk adjusted discount rate) Requires analysis and estimation of expected growth in returns