What Is My Business Worth?
The number in your head, the number on your tax return and the number a buyer will actually pay can be three very different things.
Business Worth
Valuation Starts With Earnings—But It Doesn't End There
For many small owner-operated businesses, value begins with normalized Seller’s Discretionary Earnings (SDE).
Larger or management-run businesses may be evaluated using EBITDA.
Then we look at the industry, comparable transactions, market multiples and the specific strengths and risks of your business.
Recasting the Financials
Business owners don’t prepare tax returns to impress future buyers.
They prepare them to report their business accurately and, quite reasonably, minimize taxes where legally possible.
That means the tax return may not tell the entire economic story.
Recasting identifies legitimate adjustments that can help a buyer understand the true economic benefit of ownership.
But here’s the important part:
Every add-back needs to be supportable.
We’re revealing the earnings—not inventing them.
What Can Increase Your Value?
Buyers generally love to see:
Consistent financial performance
Recurring revenue
Low customer concentration
Transferable contracts
Documented systems
Experienced employees
Limited owner dependency
Clean financial records
Healthy margins and A clear growth opportunity
The easier you make it for a buyer to imagine owning the business without you, the stronger the opportunity can become.
What Can Reduce Your Value?
Heavy owner dependency.
Declining revenue.
Undocumented cash.
One customer representing a huge percentage of sales.
Poor financial records.
Lease problems.
Licensing issues.
Deferred maintenance.
Aggressive or unsupported add-backs.
Unresolved legal or operational problems.
None automatically means your business can't sell.
But they can affect price, terms, financing and the buyer pool.
RELATIONSHIP
Asset Sale vs. Earnings-Based Value
Not every business should be valued using the same formula.
Some businesses derive most of their value from cash flow and going-concern earnings.
Others—particularly businesses with limited or inconsistent profitability—may be better positioned as an asset sale, where value comes from things like equipment, buildout, location, customer base, brand and other transferable assets.
The valuation method needs to fit the business.
Business Valuation
A Valuation Isn't a Promise
Ultimately, the market determines what a qualified buyer will pay—and on what terms.
A useful valuation gives you something much more valuable than an inflated number:
A defensible range and a strategy.