They have a rough idea. A ballpark figure. And it’s costing them millions at the closing table.
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Fifteen years. That’s how long the average private business owner spends building before they ever seriously think about selling. Fifteen years of early mornings, missed weekends, payroll stress, and the slow grind of turning an idea into something real – something with employees, customers, maybe even a waiting list.
And then, when I sit across the table from them and ask the question that should have been asked years earlier – “What would you take for it today?” – they tell me a number they made up in the shower.
Not a number from a valuation model. Not a number from a conversation with an advisor. A number that feels right. A number that sounds like enough. A number that has almost nothing to do with what a buyer will actually pay.
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“Buyers don’t care about your sweat equity.
They care about what the business produces, what risks it carries,
and how easily it runs without you.”
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What Buyers Actually Look At
When a serious buyer – a private equity firm, a strategic acquirer, or a well-advised individual – evaluates a business, they’re working through a very specific checklist. It has nothing to do with how hard you worked or how much the business means to you. It has everything to do with transferable value.
THE METRICS THAT DRIVE YOUR MULTIPLE
EBITDA: Earnings before interest, taxes, depreciation, and amortization. This is the starting point of almost every deal conversation.
Customer Concentration: If your top three clients represent 60% of revenue, that’s not a feature. That’s a risk premium.
Owner Dependency: Can the business operate at full capacity without you showing up every day? If not, buyers will price that in.
Recurring Revenue: Contracts, retainers, subscriptions. Predictable cash flow commands a premium. One-time project revenue does not.
Documented Processes: Systems, SOPs, and trained teams signal a business that transfers cleanly. Tribal knowledge is a liability.
Clean Financials: Commingled expenses, undocumented add-backs, and inconsistent bookkeeping create doubt – and doubt lowers multiples.
These aren’t arbitrary metrics. They’re the levers that determine whether a buyer sees a 3x opportunity or a 6x one. And the difference between those two numbers – on a business generating $1M in EBITDA – is $3 million left on the table.
The $2M Mistake Nobody Talks About
I’ve watched it happen more times than I can count. An owner decides it’s time to sell. They call a broker, dust off three years of tax returns, and go to market assuming they know what they have.
The offers come in. The numbers are lower than expected. There’s shock, then frustration, then – if they’re lucky – a deal that closes at a number that feels like a compromise.
What they didn’t know is that six months before going to market, they could have done something about it.
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$2M+ Average value left uncaptured by unprepared sellers |
18 mo. Time needed to meaningfully improve your exit multiple |
I’ve also watched the other version play out. An owner who came in curious – not ready to sell, just ready to understand.
We looked at their numbers. We identified three specific problems dragging their multiple down: one key customer representing 40% of revenue, an owner who personally managed the top five accounts, and two years of inconsistent EBITDA because of undocumented discretionary expenses.
They spent 18 months fixing those three things. Diversified the client base. Hired and trained an account manager. Cleaned up their books with a quality of earnings mindset.
When they went to market, they had a different story to tell – and the offers reflected it.
Six times EBITDA instead of three. The work they did in those 18 months was worth more than the previous five years of running the business.
The Valuation Gap Is a Knowledge Gap
The painful truth is that most business owners don’t know their number because nobody ever taught them to think about it.
They spent their careers learning their industry – how to deliver, how to sell, how to manage – but never learned how buyers think about value.
That’s not a character flaw. It’s a blind spot. But it’s an expensive one.
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“The owners who walk away with the best outcomes aren’t always
the ones who built the best businesses. They’re the ones who
understood their value before they went to market.”
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Understanding your valuation isn’t just useful when you’re ready to sell. It’s a management tool.
It tells you which parts of the business to invest in and which to fix. It helps you make hiring decisions, pricing decisions, and capital decisions with exit value in mind.
It changes how you run the business – and that change, compounded over time, is where the real money is made.
So – Do You Know Your Number?
Not the number you’d like it to be. Not the number that would let you retire comfortably.
The number a buyer would actually pay, today, based on what you can document and what transfers when you hand over the keys.
If you don’t know it, you’re not alone. But you’re also not in the best position to make one of the most important financial decisions of your life.
The business owners who get the best outcomes start asking this question years before they need to answer it.
They get a real valuation, understand the gaps, and spend time fixing what matters.
By the time they’re ready to sell, they’re not hoping for a good number – they’ve already built it.
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The time to find out what your business is worth is not the day you decide to sell. It’s now – while you still have time to do something about it.
Know Your Number Before It Matters
A confidential conversation costs nothing. Leaving millions on the table does.