Why there’s no number yet
Valuation isn’t a formula. It’s a negotiation between what your business has done and what a buyer believes it will do — filtered through how much they want it, how many other buyers are in the room, and how the deal is structured.
Two identical businesses can sell for very different numbers depending on who’s buying, when, and why. A strategic buyer who needs what you’ve built will pay more than a financial buyer running a spreadsheet. A clean process with multiple interested parties will yield a better outcome than a one-on-one conversation with the first person who called.
This isn’t a dodge. It’s just the truth.
What we actually look at
The starting point is earnings — specifically, what the business actually produces for an owner after you normalize for the things that are personal, one-time, or non-recurring. That adjusted number is what buyers apply a multiple to.
The multiple depends on size, industry, growth trajectory, customer quality, and how transferable the business is. It can range meaningfully even within the same sector. Getting it right requires knowing who the buyers are and what they’re paying right now — not what a Google search says.
The goal of the first conversation isn’t to give you a number. It’s to give you an honest picture.
What’s driving value. What’s discounting it. What the realistic range looks like under current market conditions. And whether there’s a gap between what you’re expecting and what the market will bear — because that gap, if it exists, is better to know about now.
That’s the conversation worth having. And it starts exactly where you’d expect: with the question every founder asks.
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Richmond Partners is an M&A advisory firm working with founder-led and family-owned businesses.
This article is for informational purposes only and does not constitute financial, legal, or investment advice.
