The Highlights
Valuation isn’t fixed, it’s a range based on risk, transferability, and competitive differentiators.
Two companies with identical revenue can sell for very different multiples.
Buyers gravitate toward predictability, not just size.
Clean books, steady cash flow, and owner independence are leverage points.
If you want a higher multiple, reduce buyer uncertainty.
The Illusion of Market Value
You hear it all the time: “This company is worth 4–6x EBITDA.”
But what makes it a 6 instead of a 3? Most owners guess it's size. “We’re over $5M now.” Or growth. “We grew 20% last year.” Or industry. “We’re in a hot niche, so we’ll get a premium.” And while those help, they don’t close the gap. Valuation isn’t only about your topline or how hard you’ve worked.
It’s about how easy you and your business are to trust.
I’ve helped sell businesses with modest growth but clean, boring consistency for 5x.
And I’ve watched owners with impressive margins and significant upside opportunity struggle to close 3x because the whole narrative of “potential” drove the value they perceived.
Buyers Pay for relative Certainty
Buyers won’t pay for potential. They pay for confidence that potential will actually materialize. So when they look at your business, they’re not just crunching numbers.
They’re mapping out risk.
They ask:
Can this run without the owner?
Are the financials clean, consistent, and prepared by a pro?
How sticky is the revenue? Project-based or locked-in with recurring contracts?
Are there key person or concentration risks on the team, in sales, with customers?
Are growth levers already working, or just hypothetical?
They also check what’s missing:
No conceivable layer of management? Red flag.
All customer relationships run through the owner? Discount.
Big customer concentration with no long-term contracts? Risk.
Adjusted EBITDA propped up by personal perks and non-standard add-backs? Trust shock.
The more these question marks pile up, the less they’re willing to pay. It’s not personal. It’s just math. Buyers know they can’t capture everything in diligence. So they hedge their risk by lowering the multiple or adding contingencies like earnouts, seller financing, or clawbacks. But when everything’s documented, delegated, and dependable is when buyers lean in and meet seller’s perceived value. That’s when you earn top-of-range offers.
Tangible Takeaways
You’re not crazy for wanting a high multiple. Here’s how to actually earn it:
Start with provable financials.
No buyer pays top dollar without clean books. Hire a great accountant. Reconcile everything.Document your ops obsessively.
SOPs, process flows, automations. The less mystery, the more value.Make yourself irrelevant.
Harsh but true. Step back from daily ops. Teach your team to win without you.Secure the revenue.
Recurring beats project-based. Show buyers they’re buying some predictability.Track deal-killers, not just metrics.
Every quarter, ask:Can someone else run this business today?
Are our financials defensible?
Would I pay 5-6x for this if I didn’t own it?
If this hit home, and you’re thinking about an exit in the next 1–3 years, my DMs are open.
I share real, trench-level stories from the deal table every week.
Follow @exit_expert on X if you want to prep for a smarter exit.