Knowledge Base

The most comprehensive, easy-to-understand source of information for selling a small to mid-sized business.

2 - Valuation

Business valuation is a complex process with dozens of competing factors. Use our guide to understanding the value of your business using multiples of your SDE (seller’s discretionary earnings) or EBITDA (earnings before interest, tax, depreciation, and amortization).

Adjusting Financials for M&A


Valuation Concepts

Business Valuation Checklist: 4 Questions to Ask First

Getting divorced? Going bankrupt? Seeking a loan? Getting sued? Planning to sell your company? At some point, an event will likely occur during the time you own your business that will trigger the need for a business appraisal.

Business Valuation & Return on Investment (ROI)

One of the key factors to take into account when considering buying or selling a business is the return on investment (ROI). When valuing a business, ROI refers to the return on an investment divided by the investment amount.

Business Valuation Standards of Value & Fair Market Value

The standard of value is a critical premise in any valuation and determines the specific methods used to appraise the business. If you retained an appraiser to value your business and the appraiser used FMV as the standard of value, you would know that potential synergies were not taken into account.

Do Buyers of Businesses Pay for Potential?

These are examples you may see as potential opportunities, but when selling a business you will soon discover that most buyers will be willing to pay little for these types of potential. Under what circumstances are buyers willing to pay for potential?

Why is the Range of Possible Values so Wide for a Business?

Valuing a business is an inherently difficult undertaking, but it’s a critical step in planning the sale of your business. The essence of valuing a business is predicting the future cash flows of a business and then placing a value on those cash flows based on their present value.

Business Valuation Methods in a Nutshell

Pricing a business is based primarily on its profitability. Profit is the number one criteria buyers look for when buying a business and the number one factor that buyers use to value a business.

Business Appraisals

Is there a Difference Between an Appraisal and a Valuation?

Regardless of how much appraisal experience they have, they should also have real-world experience selling businesses. Many business appraisals employ methods that a buyer would never use in the real world, and the knowledge used by appraisers when preparing a legal appraisal is irrelevant for owners who are considering selling their business.

Business Valuation Guide: Do I need a Valuation?

As a business owner, one of the most important questions you will face is: What is my business worth? To answer this question, most business owners pay a professional to value their business.