What Is My Business Worth? US Owner Guide
A straight answer for US owners: how buyers arrive at a number, the eight factors that move it within a sector, and how to get a written valuation of your own company.
The question every owner asks first. Here is how a buyer arrives at their number, which factors move it up or down within the same industry, and what you can change in the next twelve months.
What is my business worth?
a multiple of its normalized earnings, adjusted for cash, debt and working capital
. The earnings figure is not your reported profit. It is your profit after owner compensation is restated to market, personal expenses are removed, and one-off items are stripped out in both directions. The multiple is set by how transferable, contracted and predictable those earnings are.
Two companies in the same trade, with identical profit, are routinely valued very differently. The difference is almost never the industry. It is the proportion of revenue under written, assignable contracts, how concentrated the customer base is, whether the business runs without the owner, and whether the numbers can be proved. Those four items explain most of the spread, and all four are within an owner's control given time.
What the multiple attaches to
Time to move the number", value:
Cost of a written valuation here
You can get to a defensible range in an afternoon with three years of returns and an honest attitude to add-backs. Be conservative: every optimistic adjustment is one a buyer will remove later, in front of you.
Take three years of filed returns
Not management accounts. Whatever you present will be reconciled to the filed numbers, so start where the buyer will finish.
Add back your own compensation, then subtract a replacement
If a buyer needs to hire someone to do your job, the market cost of that person is a real cost. Add back what you take, deduct what a replacement would earn, and keep the difference.
Restate rent and related-party arrangements
If the business pays you below-market rent on a building you own, deduct the difference. If it pays above market, add it back. Both directions are legitimate and buyers check both.
The vehicle, the phone, the travel, the family member on payroll. Item by item, with a figure against each. A single round-number adjustment will be removed in diligence.
Remove what will not recur
One-time legal settlements, a system implementation, government relief income. Remove them with the document that proves they were one-off. If a cost appears in all three years, it is not one-off.
Split your revenue by type
Contracted recurring, repeat but uncontracted, and one-off project work, each with its own margin. This split does more to explain your multiple than the industry you are in.
Apply a range, not a point
Use a range of multiples from comparable evidence in your sub-sector, and treat the top of that range as available only if the transferability factors are genuinely in place. Then deduct debt, add surplus cash, and subtract fees and tax to see what you would actually receive.
Proportion of revenue under contract
Written, assignable agreements with indexation and a notice period. This is the difference between selling a schedule and selling a sales effort, and buyers price the two differently.
Customer concentration: A single customer above roughly ten to fifteen percent of revenue changes the multiple and pushes the structure toward deferred consideration. Buyers are pricing the risk the relationship leaves with you.
A single customer above roughly ten to fifteen percent of revenue changes the multiple and pushes the structure toward deferred consideration. Buyers are pricing the risk the relationship leaves with you.
Owner dependence: If pricing, technical sign-off and the key relationships all run through one person, the buyer is acquiring a job. A tested general manager is one of the few investments that visibly pays at closing.
If pricing, technical sign-off and the key relationships all run through one person, the buyer is acquiring a job. A tested general manager is one of the few investments that visibly pays at closing.
Quality of the financial records
Monthly accounts that reconcile, margin by line, a working capital history. Poor records do not merely reduce confidence, they hand the buyer control of the working capital target.
Stable margin across three years beats a single strong year. Buyers discount volatility, and a peak year in the trailing twelve months invites a longer look at the prior two.
Workforce and licensing: Certification coverage, technician retention and a working recruitment pipeline. In field service and compliance sectors, people are frequently the real constraint on a buyer's growth plan.
Certification coverage, technician retention and a working recruitment pipeline. In field service and compliance sectors, people are frequently the real constraint on a buyer's growth plan.
Systems and data: One operating platform with finance integrated, asset registers that can be exported, service history that can be produced on demand. Fragmented systems make integration expensive and the buyer prices that.
One operating platform with finance integrated, asset registers that can be exported, service history that can be produced on demand. Fragmented systems make integration expensive and the buyer prices that.
Who the buyer is: An individual buyer, a regional operator and a national platform executing a stated acquisition strategy will pay different amounts for the same company. This is why buyer selection is part of the valuation conversation, not separate from it.
An individual buyer, a regional operator and a national platform executing a stated acquisition strategy will pay different amounts for the same company. This is why buyer selection is part of the valuation conversation, not separate from it.
A majority of revenue under written, assignable agreements
No customer above five percent of revenue
A management team that has run the business without the owner
Three filed years of consistent organic growth
Add-backs documented before a buyer asks
One operating system, with finance integrated
Several credible buyers in the process at the same time
Revenue re-won every year with nothing signed
A single customer representing a quarter of revenue
The owner holding pricing, sign-off and every relationship
One strong year following two weak ones
A large round-number adjustment with no supporting detail
Records spread across systems that do not reconcile
One buyer, approached first, with exclusivity granted early
Can I get a valuation without paying for one?
Yes. Our written valuation report is free and carries no obligation. It rebuilds the earnings the way an acquirer will, prices contracted revenue separately from project work, and sets out the specific factors holding the multiple down. Owners use it to decide whether a sale is worth pursuing at all, which is a decision best made with a real number rather than a guess.
Is a business valuation calculator accurate?
A calculator can give you a directional range if it asks for normalized earnings and the quality of your revenue. It cannot be accurate if it only asks for revenue and an industry, because that ignores everything that actually moves a multiple within a sector. Treat any instant figure as a starting point for a real conversation rather than a valuation.
How much does a formal business appraisal cost?
A formal appraisal prepared by a credentialed appraiser for tax, litigation or shareholder purposes is a paid engagement, and the fee depends on scope and complexity. That is a different product from a market valuation prepared to answer what a buyer would pay. If your purpose is a possible sale, start with the market view.
Does my industry set the multiple?
It sets the range. Where you land within that range is decided by the transferability of your earnings: contracted revenue, concentration, management depth and the reliability of your records. Owners consistently overestimate the effect of the sector and underestimate the effect of the four factors they actually control.
Will the valuation be the price I receive?
The valuation is the enterprise value. What you receive is that figure less debt and debt-like items, plus surplus cash, adjusted against a working capital target, less advisory and legal fees and tax on the gain. How much of it arrives at closing, as opposed to in an earn-out or a seller note, is a separate and equally important question.
How quickly can I increase the value?
Pricing discipline and documented add-backs can be addressed in a quarter. Contract conversion, reducing concentration and building management depth take twelve to twenty-four months, and they are worth far more. This is the argument for finding out where you stand now rather than at the point you want to sell.
What should I do first?", answer:
Request the free written valuation report. It takes a few minutes to start, produces a defensible earnings rebuild and a range, and names the factors suppressing your number so you can decide what to do about them.
Selling a Business in the US
A free written valuation for US business owners: normalized earnings, an evidenced multiple range, and the factors suppressing the number.
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Questions owners ask before they start
A free written valuation report rebuilds your earnings, prices your recurring revenue separately, and shows the specific factors holding your multiple down. It is the sensible first step before any of the work on this page.
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