How do you valuate a business that you want to invest in / buy?

In words of Aswath Damodaran, Valuation is a craft. Assuming that the business is unlisted, to begin with I will value a business using two methodolgies:

a)DCF - for which I would first require to prepare projection, which would be based on some research about the business, industry/ sector it belongs to, current market dynamics, outlook for the industry, and the exisitng gap in the target market. Approrpriate discounts would be considered while calculating WACC (using CAPM) to absorb in the risk involved. Further, while calculating FCFF, instead of using Gordon Growth for termial value (as I would not be sure of the stable year or the operation for the business), I would apply appropriate reinvestment rate. Applying all these inputs an EV would be derived for the Business in concern.

b) Relative valuation - Valuation derived based on EV/EBIT or EV/EBITDA multiple will be reflective of an EV for the business which would be governed by Market Dynamics. Suitable discounts would be assumed to absorb the risk of public to private conversion of the multiples. Additionally, it is difficult to find similar public companies in the region, suitable discounts would be provided.

Analysis the two values, and what exactly makes senses based on market dynamics and outllok, a value for the business can thus be finally derived.