Which valuation method should I use?

Use the method that matches how the business produces value and the evidence available. Profitable private companies are often anchored to maintainable EBITDA or cash flow multiples. A DCF tests long-term assumptions, while revenue multiples require strong growth and reliable unit economics. Use several methods to triangulate a range.

What determines a private company's transaction multiple?

The multiple reflects the quality of the asset and the strength of the process. Buyers adjust for scale, growth, recurring revenue, margins, cash conversion, concentration, capital expenditure, management depth and competitive tension. Public-company multiples are reference points, not direct answers for a private transaction.

How do I bridge enterprise value to shareholder proceeds?

Enterprise value usually assumes a cash-free, debt-free business with normalized working capital. Shareholder proceeds then reflect net debt, debt-like items, cash, the closing working-capital adjustment and any deferred or contingent consideration. Agree the definitions early because the bridge can move proceeds materially.

How should I reconcile my valuation with a buyer's offer?

Break the difference into maintainable earnings, the multiple and the bridge from enterprise value to proceeds. Buyers may also have different synergy assumptions, return thresholds, financing costs or risk views. Ask for the valuation bridge, then use competition to test which assumptions the wider market supports.

Which changes can materially improve valuation before a sale?

Improve sustainable earnings, recurring revenue, cash conversion, customer concentration, management depth, controls and working-capital discipline. Separate genuine normalization items from recurring costs. Buyers pay for evidence, so the strongest improvements have enough trading history to withstand quality-of-earnings work and diligence.

What is my business worth?

Your business is worth a range, not one precise number. For an established private company, that range is usually based on maintainable earnings and what credible buyers or investors would pay after accounting for growth, cash conversion, concentration, management dependence and risk.

Separate enterprise value from shareholder proceeds. Debt, cash, working capital, debt-like items, earn-outs and rollover equity can materially change what owners receive even when the headline valuation does not move.

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Business valuation glossary

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Six terms used when estimating, comparing and negotiating company value.

DCF Valuation

Discounted Cash Flow (DCF) Valuation is a financial method used to estimate the value of an investment based on its expected future cash flows. These cash flows are adjusted to their present value using a discount rate, typically the company's weighted average cost of capital (WACC). This approach helps determine the intrinsic value of a company or asset.

Multiples Valuation

Multiples valuation is a financial measurement technique used to estimate the value of a company by comparing it to similar companies using financial ratios, or "multiples." Common multiples include Price-to-Earnings (P/E), Enterprise Value-to-EBITDA (EV/EBITDA), and Price-to-Sales (P/S). This method is widely used because it allows for quick comparisons and is relatively straightforward to apply.

Adjusted EBITDA

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a financial metric used to assess a company's operational performance. It modifies the standard EBITDA by excluding non-recurring, irregular, or non-cash expenses to provide a more accurate reflection of ongoing profitability.

Relative Valuation

Relative valuation is a method used to assess the value of an asset by comparing it to the values of similar assets in the market. This approach relies on market multiples derived from comparable companies or transactions, such as price-to-earnings (P/E) ratios, enterprise value-to-EBITDA (EV/EBITDA), and price-to-book (P/B) ratios.

Control Premium

A control premium is the extra price a buyer pays above a company's standalone or minority-share value to acquire control in an M&A transaction or valuation.

Liquidation Preference

A liquidation preference gives specified investors priority over common shareholders for available proceeds from a sale, merger or winding up, according to the governing documents.

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What is my business worth?

Questions to work through

Tools for testing value and capital structure

Valuation Calculator

Debt Capacity Calculator

Tech Stack Tools Directory

Articles

Private Company Valuation: 3 Approaches Owners Should Understand

Adjusted EBITDA: Formula, Add-Backs and Valuation Risks

How to Increase Company Valuation Before a Sale or Raise

SaaS Valuation Metrics and Methods: ARR, NRR and Multiples

Sell-Side Quality of Earnings: Seller QoE Checklist

Liquidation Preference Explained: Types, Examples and Founder Impact

Checklists

Month-End Closing Process

11 Tips to Improve Your Valuation

Business valuation glossary

DCF Valuation

Multiples Valuation

Adjusted EBITDA

Relative Valuation

Control Premium

Liquidation Preference

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