Valuing a business is more like an art form than a science, because there are so many factors and assumptions to make about the future in any calculation. Here's the sort of things that need to be considered http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=107 3789141

In principle. to value a business, then it's the higher of the Net Assets or it's Discounted Earnings Stream. Unless the business is going bust or is going through a downturn, then you would expect a profitable business to be worth more than just it's Net Assets. So in most cases you would just be interested in it's Discounted Earnings Stream.

A very crude way to calculate an upper value for the business is to divide the cash it generates in one year by the % you can earn invested in government bonds. For example say a business generated £10k of free cash (after allowing for taxes to be paid) and the current 30 year rate is 4.75% from here http://www.bloomberg.co.uk/markets/rates/uk.html Then the upper value for the business would be 10,000 / 0.0475 = 210,526. You wouldn't pay any more than that because if you had £210k you could earn £10k pa. just by sticking it in government bonds and without all the effort of running a business. (note this assumes that the business continues to make a steady 10k per year)

For a more accurate valuation, you probably wouldn't use the long term bond rate, since running a business is risky and you would want a much better reward for your money. The stock market has achieved 12% returns historically, so our 10,000 / 0.12 = 83,333 or put another way is a multiple of about 8 times. (This approach assumes the business is average and will achieve average returns over the long term)

Any prospective buyer would probably want a lower multiple, and any seller would want a higher multiple. If you look at the stock market any day you will see that ratio of market price (what people are actually prepared to pay) to the current earnings of the company is called the price earnings raitio or PE ratio. In effect this is a multiple of the earnings, but if you notice the PE's are much higher than the long term average of 8, this is because the market expects future earnings to much higher than current earnings. For example the PE of the FTSE 100 companies is about 13, and this is where it gets difficult in deciding what multiple to apply to a company for valuation. If it were a biotech company, then high earnings growth would be expected as the industry is in infancy, but if it were a bank, then low earnings growth rate would be expected as that industry has reached maturity. So valuations depend on what the company actually does to get it's earnings.

To get a more accurate value, you would really need to project the cash earnings (not profit, since as a business expands more cash is needed for working capital like stock and debtors, so some of the profit would be tied up in working capital) and discount it year by year into it's net present value (NPV) using an appropriate discount rate for that business or sector.

Since most companies are unique, it is difficult to generalise and calculate their value. That's why they employ accountants to make assumptions, projections and calculations!