Seller FAQs: Determining Business Value


The process to determine business value is both an art and a science. Ultimately, the most accurate value is the amount a buyer is willing to pay for the company and the Business Owner is willing to accept, when neither party is under duress.

How Do I Determine the Value of My Business?

The first question to ask is, “What will you, the Business Owner, do with the information?pondering man with hand holding chin looking to the upper left with a light bulb graphic to the right to illustrate the complexity of business value

  1. Are you wanting a benchmark to measure future growth and improvement (in other words, a valuation benchmark)?
  2. Do you have an “exit number” and want to know if you have reached your goal selling price?
  3. Are you simply curious with no immediate desire or intent to sell your business?
  4. Are you ready to sell and want to negotiate from a position of knowledge?

If you are building your business for a future sale, or simply curious, a broker opinion of value will give you the information you need to plan for a future exit by utilizing multiples and comparables.

The multiples and comparables are weighted to determine a potential asking price. Then, this figure is put through a lender’s assessment and a buyer’s test to verify that the asking price is attainable in today’s market. Finally, a Gateway broker can provide you with a broker opinion of value at no cost and with no obligation to list your business for sale.

Furthermore, if you are ready to sell your business now, consider the 3 options below:

  • Rely on a broker opinion of value
  • Leverage Gateway to provide a more in depth study:
    • After utilizing proprietary software, weighting asset based, market based, and income based approaches, to determine selling price ranges.
  • Secure an independent 3rd party valuation:
    • If your Seller Discretionary Earnings are near $1 Million annually, the independent third party valuation allows you to negotiate from a position of knowledge. Your Gateway Business Broker can facilitate a 3rd party valuation at a significant cost savings to you.

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