Valuation is both an art and a science. There is no single "correct" number — instead, experienced advisers use several methods together to establish a defensible range and understand what drives value up or down.
Comparable company analysis
This method values a business by reference to the trading multiples of similar listed companies — most commonly enterprise value to EBITDA. It is quick and market-based, but truly comparable public companies can be hard to find.
Precedent transactions
Here, value is benchmarked against the multiples paid in recent acquisitions of similar businesses. Because these are real deals, they often capture a control premium that trading multiples do not.
Discounted cash flow (DCF)
A DCF projects the company’s future free cash flows and discounts them to present value. It is the most fundamental method and the most sensitive to assumptions — small changes in growth or discount rate move the answer materially.
What actually moves value
- Quality and predictability of earnings
- Growth rate and market position
- Customer concentration and recurring revenue
- Management depth and dependence on the owner
- The competitive tension in the sale process itself
The last point matters most: in practice, the price achieved often depends less on the model than on how well the process is run. That is where an experienced adviser makes the difference.