Business valuation
At a glance
- For
- Buyers, sellers, partners and owners planning succession
- Takes
- Two to three weeks once the records are in
- Format
- Records review, valuation report and a walk-through
- You get
- A valuation range, the method behind it and the risks that move it
- Price
- Priced on assessment
- What the business really earns once the owner's pay and once-off items are adjusted
- What the value depends on: the owner, a few customers, or the records themselves
- A plain answer to the question you came with: is it worth it at this price?
What we hear from owners
- “The asking price is a number the seller likes, not a number the records support.”
- “The profit looks good until you take out what the owner does for free.”
- “Half the revenue comes from two customers who know the owner, not the business.”
- “You only find the gaps in the records after the deal is signed.”
Is it worth buying? A valuation answers that first
A valuation is most useful before money changes hands. It shows what the business earns once the numbers are cleaned up, and what that value rests on.
What the valuation covers
- 01
Records reviewStatements checked against the bank, so the figures hold up.
- 02
Normalised earningsWhat the business earns without the owner's adjustments.
- 03
Valuation rangeRecognised methods, with every assumption written out.
- 04
Risks that move the priceOwner-dependency, customer concentration, debtors, records.
- 05
Negotiation pointsWhere the asking price and the records disagree.
- 06
What would raise the valueFor sellers: the changes that matter most, in order.
What you get
Valuation summary
Sample
Normalised earnings
| Reported profit | R780,000 |
| Add back: personal expenses through the business | +R64,000 |
| Add back: once-off legal bill | +R42,000 |
| Less: a manager's market salary for the owner's hours | −R312,000 |
| Maintainable earnings | R574,000 |
Value the records support
Supported range R1.9m to R2.9m, midpoint R2.4m. Asking price R3.2m.
- Owner prices every jobLowers value
- Two customers, 46% of revenueLowers value
- Books reconciled to the bankSupports value
How a valuation runs
- 01
The question
Buying, selling or partnering, and at what price.
- 02
The records
Three years of financials, bank statements and key contracts.
- 03
The value
Earnings normalised, methods applied, the range explained.
- 04
The walk-through
The findings together, figure first.
Who it is for
- Buyers of a small business or contracting firm
- Owners selling in the next one to three years
- Partners agreeing what a share is worth
- Families planning succession
What you receive
- A valuation range, method and assumptions
- A normalised earnings schedule
- Risks ranked by their effect on value
- Questions and documents to ask the seller for
- A walk-through of the findings
Templates that help
Read more
- Thinking of buying a business? The due diligence checklistBusiness valuation · 7 min read
- Why most contractor businesses can't be sold (and how to fix yours)Business valuation · 7 min read
- Owner-dependent: what it costs you and how to fix itSystems · 5 min read
- Taking over a business: the first ninety days of the numbersWoman In Business · 6 min read
Frequently asked
Something else on your mind? A discovery call covers the detail.
Talk to Connie about business valuation
Leave your details and a line about the business. You get a reply to book a discovery call, then a fixed quote and written scope before anything starts.
Open the full contact page