What Is My Business Worth?

A multiple is shorthand for the return profile a buyer expects. A buyer paying 6x adjusted EBITDA is implicitly accepting roughly a 16–17% pre-tax yield on steady-state cashflow, before any growth. The higher the multiple, the more confidence the buyer has that the cashflow continues — or grows — without you.

That confidence comes from a handful of measurable things:

• Revenue quality. Recurring contracts, multi-year MSAs, and long-tenured customers earn premium multiples. Project-based or referral-driven revenue does not.
• Customer concentration. If one customer is more than 20% of revenue, expect a discount or an earn-out. Over 35% and you are negotiating against a hard ceiling.
• Management depth. A buyer pays more when the business runs without the founder. If you sign every check and meet every key customer, the multiple is compressed regardless of profitability.
• Margin trajectory. Three years of flat-to-improving EBITDA margin is materially more valuable than three years of declining margin at the same level.

For industry-specific bands, our sell-a-business directory publishes the current ranges across 50 industries — HVAC, IT services, manufacturing, logistics, healthcare, and more.

Reported EBITDA is your accountant's number. Adjusted EBITDA is the buyer's number — and the gap is often 15–25% in owner-operated businesses. Closing that gap is one of the highest-return tasks an owner can do before going to market.

Typical adjustments include:

• Owner compensation in excess of a market wage for an actual replacement executive.
• Personal expenses run through the company — vehicles, travel, club memberships, family on payroll.
• One-time costs that will not recur — a botched ERP implementation, a one-off legal settlement, COVID-era PPP processing, a major leasehold write-off.
• Synergies the buyer will realize — rent in an owner-occupied building priced at market, contract terms that the buyer's scale will improve.

A quality of earnings (QoE) study, normally performed during diligence, formalizes this. Doing a sell-side QoE before going to market lets you control the narrative instead of negotiating it under buyer scrutiny.

Professional valuations triangulate across three methods. Any single number in isolation is suspect.

1. Comparable transactions (the market check)

What did similar businesses actually transact for? PitchBook, S&P CapitalIQ, and proprietary advisor databases hold deal data showing the multiples paid for businesses of your size, industry, and profile. This is the most credible anchor in any owner conversation, and it is what buyers themselves benchmark against.

2. Discounted cash flow (the cashflow check)

Forecast 5–7 years of free cash flow, apply a discount rate that reflects the risk of those flows, and add a terminal value. DCF is most useful when the business is changing — a new product line, a wind-down of a customer, a margin inflection. For steady-state businesses, the answer tracks closely to a market-multiple result.

3. Asset-based (the floor check)

Net asset value sets a floor for asset-heavy businesses (manufacturing, distribution, real estate-backed services). For pure services businesses the asset value is usually below operating value, so this method becomes a reasonableness check rather than the primary number.

If you are 12–24 months from a sale, these four levers — in roughly this order — produce the biggest swing.

1. Reduce customer concentration. Every percentage point of revenue moved off your top customer raises perceived risk-adjusted value.
2. Document recurring revenue. Convert handshake renewals into written contracts, even if pricing is unchanged. Contracted ARR multiplies at 2x the rate of transactional revenue.
3. Hire your replacement. A capable GM or COO who can run the business without you is worth 1–2 turns of EBITDA. Buyers pay for transferability.
4. Clean up the financials.A QoE-ready P&L and a cash-basis balance sheet reconciled to bank statements removes the discount buyers apply for messiness.

Our business value enhancement engagements are built around running these plays inside an 18–24 month window before a planned exit.

A self-estimated EBITDA multiple is a useful planning anchor, not a sale price. The variance between an owner's estimate and a real market outcome is usually ±20–30% — driven mostly by adjustments the owner did not see and buyer behavior the owner could not predict.

The two practical next steps:

• Try our free business valuation tool for an industry-calibrated range based on your inputs.
• Book a confidential 30-minute call. We will give you a real range, walk you through the adjustments we would apply, and tell you the one or two moves that would move the number most in your specific situation.