Insights / Guide
What is my business worth?
If you are asking what is my business worth, this guide explains how a business is valued, what drives the number up or down, how to get a figure you can defend, and when an owner should get a valuation.
A business is worth what a willing buyer will pay, and a valuation is a structured estimate of that figure. Most owner-managed businesses are valued on a multiple of normalised earnings, cross-checked against cash flow and assets. The final number turns less on the profit itself than on how much risk a buyer sees in that profit continuing.
The three ways a business is valued.
In plain terms, there are three lenses. A serious valuation looks through all three and reconciles them, rather than relying on one.
Earnings multiple
Profit times a numberStart with normalised EBITDA, the underlying profit once one-off and owner-specific items are stripped out, then apply a multiple a buyer would pay for that kind of earnings. The multiple is where risk and quality show up.
Discounted cash flow
Future cash, valued todayProject the cash the business is expected to generate, then discount it back to a present value to reflect time and risk. It rewards businesses with visible, durable cash flows and exposes those that depend on optimistic forecasts.
Asset-based
What it owns, net of debtValue what the business owns less what it owes. This sets a floor and matters most for asset-heavy businesses, but it usually understates a profitable operating business with goodwill and momentum.
What moves the value up or down.
Two businesses with identical profit can be worth very different amounts. The gap is risk, and most of these levers can be improved before a sale. See exit readiness for the work that closes that gap.
Clean, reliable financials
Numbers a buyer can trust reduce perceived risk, and lower risk is what a higher multiple pays for. Messy accounts pull the figure down before anyone reads the story.
Recurring, diversified revenue
Repeat revenue spread across many customers is worth more than one-off sales. Customer concentration, where a few accounts carry the revenue, is one of the fastest ways to lose value.
Low owner dependence
If the business needs the owner in every decision and every relationship, a buyer is buying a job and a risk. A business that runs without you is worth more.
A credible growth story
Evidence for where the next stage of growth comes from, not just a claim that it will. Demonstrated growth lifts both the earnings and the multiple applied to them.
A clear-eyed business valuation shows where you stand on each of these, and how each one is moving the number, before a buyer ever sees the business.
How to get a figure you can defend.
A defensible valuation is one you can explain line by line and that survives a buyer's diligence. It is built, not asserted.
Clean the financials
Start from trustworthy numbersReliable accounts are the foundation. Anything a buyer cannot verify becomes a discount, so the work starts well before the valuation itself.
Normalise earnings
Find the real profitAdjust for one-off costs, owner salary and perks, and items that will not recur, so the multiple is applied to the earnings a new owner would actually inherit.
Use more than one method
TriangulateReconcile the earnings multiple, discounted cash flow, and asset view. A figure supported by several methods is far harder for a buyer to argue down.
Benchmark the evidence
Anchor to the marketTest the multiple against comparable transactions and the realities of your sector, so the number reflects what buyers pay rather than what you hope.
Common mistakes with valuation.
When owners should get a valuation.
A valuation is not only for the moment of sale. It is a decision tool, and the earlier you have it, the more it is worth.
Before a sale
To set realistic expectations and to see what would move the number while there is still time to act, ahead of a process to sell your business.
Shareholder changes
When bringing in, buying out, or transferring a shareholder, a defensible figure keeps the conversation fair and grounded.
Raising capital
Investors and lenders price risk. A credible valuation supports the terms you can negotiate.
As a benchmark
Even with no transaction planned, a periodic valuation tracks whether the business is becoming more or less valuable, and why.
Frequently asked questions.
What is my business worth?
A business is worth what a willing buyer will pay for it, and a valuation is a structured estimate of that figure. Most owner-managed businesses are valued on a multiple of normalised earnings, cross-checked against cash flow and assets, with the final number depending heavily on how much risk a buyer sees in the earnings.
How is a business valued?
The common methods are an earnings multiple applied to normalised EBITDA, a discounted cash flow that values expected future cash, and an asset-based view of what the business owns less what it owes. A defensible valuation usually triangulates more than one method rather than relying on a single number. See business valuation.
What lowers the value of a business?
Anything that makes the earnings look riskier: messy or unreliable financials, revenue concentrated in a few customers, heavy dependence on the owner, and no clear evidence for future growth. These are also the things owners can improve before a sale.
How do I get a defensible valuation?
Start with clean financials, normalise the earnings for one-off and owner-specific items, value the business with more than one method, and benchmark against comparable transactions. A defensible figure is one you can explain line by line and that survives a buyer's diligence.
When should I get a business valuation?
Before a sale, before bringing in or buying out a shareholder, when raising capital, and periodically as a benchmark even when no transaction is planned. Getting a valuation early shows what would move the number while there is still time to act on it.
Get a defensible valuation.
Whether a sale is this year or years away, knowing what your business is worth, and what is moving the number, is the first move. Tell us where you are, and you will get a senior reply within one business day, in writing.