Business Valuation: How Much is My Business Worth?

While selling a business is a financial matter, deals can quickly turn emotional, especially if business owners lack the hard data to justify their asking price.

Business valuation isn’t just arriving at a number. It’s about presenting a strong case to buyers, with airtight financials covering everything from tangible assets and cash flow to brand reputation and market potential.

To ensure you come to the table with a strong negotiating position, you need an ally—financial experts who streamline the business valuation process and set you up for success. Here’s an overview of our business valuation process.

Why Business Valuation is Critical

In simple terms, professional business valuation helps business owners replace gut feelings with concrete numbers that prospective buyers understand and respect.

Business valuation services ensure you:

• Know your company’s true market value
• Can you support your asking price with clear financial statements
• Understand which factors drive your business’s value
• Identify areas for improvement to maximize resale value
• Attract qualified investors/buyers
• Avoid common roadblocks that cause promising deals to collapse

Key Company Valuation Methods

There are generally four company valuation techniques. To arrive at a well-supported number, our financial experts typically use a combination of the following approaches:

Market Value Approach

This process is similar to “pulling comps,” a method real estate professionals use to compare your home to similar properties and estimate its market value.

Similarly, our business consultants compare your business to others in the same industry while accounting for market conditions and industry trends. This is incredibly useful, particularly when we have strong data on comparable businesses.

Income Approach

Using the income approach, our financial experts analyze your historical performance, industry trends, and market conditions to determine:

• How much revenue your business generates now
• How much it will likely generate in the future

The income approach is particularly useful for businesses with stable cash flow and strong growth trajectories. Why? It shows buyers that you have stable, long-term earning power.

Asset-Based Approach

The asset-based approach helps determine what your business is worth by tallying asset value, including:

• Tangible assets: property, equipment, and inventory
• Intangible assets: intellectual property, patents, and brand identity

Next, we subtract liabilities like debts and accounts payable to firm up the company valuation process.

Earnings Multiplier Approach

This straightforward method takes your business’s annual earnings before interest, taxes, depreciation, and amortization (EBITDA) and multiplies it by an industry-specific factor to determine company value.

It’s worth noting that different industries use unique multipliers. A software or technology company might sell for 6-15 times its EBITDA due to its high growth potential. Meanwhile, a medical practice might sell for 5 times its EBITDA. It all depends on the industry and market conditions.

Factors That Influence Business Valuation

There are four primary factors that influence the business valuation process, regardless of industry or size:

• Financial performance: Buyers want to see strong financial performance, along with supporting documentation highlighting key metrics. These include EBITDA margins, revenue growth rates, and working capital. Clean, well-organized financial records can significantly strengthen your negotiating position.
• Market conditions: Business value often depends on the health and stability of the market as much as it depends on the company itself. Our business valuation experts always analyze industry trends, competitive dynamics, and growth potential to determine how market conditions might impact future performance.
• Intangible assets: Although intangible assets like intellectual property, patents, and brand identity cannot be touched, their value is very real. Strong intangibles often justify higher company valuations. 
• Liabilities & risks: The less debt you have and the more you can demonstrate risk mitigation strategies—like diversified customer bases and documented processes—the stronger your negotiating position will be.

Expert Business Valuations Designed To Empower

Whether you’re planning a merger or acquisition, are ready to make an exit, or simply want to know your market position, our business valuation experts can help. We’ll equip you with the hard data you need to not only plan for the future but enter negotiations with confidence. Book a discovery call today!