Valuation is a disciplined process, not a formula applied in isolation. Here is how we think about what a business is worth.
For most owners, the value of a business is deeply personal — it represents years of effort, relationships, and risk. Our job as a buyer is to translate that into a fair, defensible number that reflects both the past and the future.
Earnings are the starting point
Valuation typically begins with a multiple of annual earnings — either EBITDA (earnings before interest, taxes, depreciation, and amortization) or SDE (seller's discretionary earnings) for owner-operated businesses. The multiple varies by industry, size, growth, and risk.
Multiples reflect risk and durability
A business with recurring revenue, a diversified customer base, and a capable management team commands a higher multiple than one dependent on a single customer or the owner personally. We look for durability: will the cash flow continue after the owner steps back?
Adjustments matter
We normalize earnings for one-time expenses, owner compensation, and non-operating items to understand the true economic performance. An accurate, well-supported set of financials protects both parties and speeds the process.
Value is a conversation, not a verdict
A responsible valuation accounts for the owner's objectives, the transition plan, and the resources required after closing. We prefer to be candid early rather than manufacture certainty before diligence is complete.
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