It’s the question every business owner asks at some point. Especially when the valuations they receive vary so dramatically. And it’s no coincidence: behind every number lie different assumptions, methodologies, and perspectives.
Business valuation isn’t just for when someone wants to sell. You also need it when a partner joins, when you’re seeking financing, when you’re distributing shares among children, or when you’re defining incentives for your management team. What’s at stake is truly understanding how much your business is worth, why it’s worth that amount… and what you could do to make it worth more.
This confusion is seen constantly. And it’s dangerous.
Value and price are different things. Value is a reasoned estimate of the business based on data, projections, and analysis. Price… well, that’s what someone is willing to pay and what the seller is willing to accept. It can be far above or far below value, depending on urgency, expectations, synergies, or simply how much a buyer likes the business.
An illustrative case: a logistics company had an estimated value of €8 million but was sold for €12 million. Why? Because the buyer specifically needed that geographic location and those contracts. The synergies justified the difference.
That’s why, before talking about price, you need to know what value you’re really working with.
Discounted Cash Flow (DCF)
This is the preferred method when there is some stability and you can project the future with a degree of confidence. Essentially, you forecast how much cash your business will generate in the coming years and bring it back to present value using a discount rate (the famous WACC, basically your cost of capital).
The advantage? It reflects the real potential of the business.
The problem? It relies on many assumptions. If growth projections or the discount rate are wrong, the whole house of cards collapses.
Example: a tech startup projected 40% annual growth for five years. It sounded great until closer analysis showed that level of growth wasn’t feasible. Realistic projections were closer to 15% annually. The difference in valuation was dramatic.
Comparable Multiples
Here you look at how similar companies are valued, using ratios like EV/EBITDA, P/E, or revenue multiples. It’s useful for having a quick benchmark and for explaining why your company can’t be worth 50x revenue when the sector trades at 2x.
But comparables must be truly comparable. There have been disastrous valuations from copying multiples of companies that only shared an industry label but had completely different business models.
Asset-Based Valuation
This is the most straightforward: sum up the assets, subtract the liabilities, and you have your value. It works well for companies with significant tangible assets or in liquidation.
The problem is that it falls short when a company’s value comes primarily from intangibles, technology, brand, or scalability. A consulting firm might have assets worth €50,000 but be valued at €2 million because of its client portfolio and expertise.
And if none of these fit…
The truth is, methods often need to be combined. There are specific models for startups, and others for niche sectors. But what really matters isn’t mastering every formula in the world. It’s knowing when to use each one and, above all, how to explain the results without getting lost in jargon nobody understands.
There are 80-page valuation reports full of beautiful charts that are useless. And there are 15-page ones that help close multimillion-dollar deals. The difference isn’t the amount of analysis, but whether the valuation helps make decisions.
First, you need a financial narrative that makes sense. This means clearly explaining what makes the business work: how money comes in, how much actually stays in the business, and whether the process is repeatable.
A client once said their company “sold technology.” But on closer inspection, their real business was implementation and ongoing maintenance. The technology itself was almost a commodity. Understanding this completely changed the valuation approach.
Second, scalability has to be realistic. Can the company grow? By how much, and at what cost? Is there room to raise prices without losing customers? Can new sales channels be opened?
This is where the detailed work comes in: explaining what levers the business really has to multiply value without multiplying problems. Because growth for growth’s sake doesn’t help if every additional euro of revenue costs €1.20 to generate.
The information memorandum must be honest. It’s not a catalog of the company’s virtues, but a map of the business showing what it does well, what risks exist, where critical dependencies lie (that client representing 40% of revenues, or the executive without whom nothing works), and how all that affects value.
And an important point: you need to think like an investor. How will someone putting in the money see the business? What could they do with it that isn’t being done now? This perspective is key to building value, not just calculating it.
Valuing a company isn’t about mechanically applying formulas. It’s about building a clear, realistic, and useful vision of what the business is worth today… and what it could be worth in the right hands.
Is there a sale process, investment round, or restructuring underway? Do you need to know what your business is truly worth — not in theory but in the real world? Let’s talk.
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