Find Out What Your Durham Business Is Worth
Owners ask for a valuation for all kinds of reasons. Some are selling this year. Some are looking at it two or three years out. Some received an unsolicited offer and have no way to judge whether it is reasonable. Some are planning retirement. Others simply want to know what they built is worth.
You don’t need to be ready to sell to find out what the business is worth.
Our valuation is free, confidential, and comes with no obligation to list or sell. Durham Business Brokers have been selling businesses for fourteen years, and the number we give you reflects what companies like yours actually transact for, not what a formula produces in isolation.
How Do You Determine What a Business Is Worth?
A business valuation considers what a buyer can reasonably expect to earn from the company, along with the assets, risks, market conditions, and other factors that affect what buyers are willing to pay.
That means valuation starts with your company’s characteristics, not a formula. Profitability and the earnings the business actually produces. How much of the revenue recurs or sits under contract. Whether a few customers carry most of it. How much of the operation depends on you personally. Whether management depth exists beneath the owner. How well the financial records support what you report. Which contracts, leases, and relationships transfer to a new owner. The assets involved in producing the work. And the demand from buyers currently active in your industry.
Only then does methodology come into it, and the method depends on how the business is structured.
Seller’s Discretionary Earnings (SDE)
Owner-operated businesses are often valued using Seller’s Discretionary Earnings. SDE starts with reported profit and makes appropriate adjustments for owner compensation and for legitimate discretionary or non-recurring expenses that would not continue under a new owner.
The result provides a way to assess the economic benefit available to a buyer who will work in the business.
EBITDA
EBITDA is more commonly used when the business operates independently of the owner and you can evaluate financial performance without owner-specific compensation and expenses affecting the calculation.
Which method applies is a determination based on the size, structure, and operation of the business, not a threshold you cross at a particular revenue or profit figure.
What Factors Affect Your Business Valuation?
Most of these come down to the same question a buyer is asking. How reliable are these earnings once somebody else owns the company?
Earnings and profitability. The level of earnings matters, and so does consistency. Steady results across several years read differently than one strong year following two weak ones.
Recurring and contracted revenue. Revenue that arrives under agreement carries less uncertainty than revenue that has to be won again every month. Greater uncertainty can reduce what a buyer is willing to pay.
Customer concentration. When one or two accounts produce most of the revenue, losing a single relationship changes the whole picture. That risk can affect the price and terms a buyer is willing to offer.
Owner dependence. If you handle the quoting, relationships, and decisions, a buyer has to plan for what happens when you are no longer there.
Management and employees. A team that can run the business and is likely to stay through a transition can reduce the risk of owner dependence.
Financial records. Clean, consistent statements that agree with the tax returns let a buyer and a lender verify the earnings. Records that require explanation slow everything down and invite discounting.
Industry and buyer demand. Interest varies by industry, and it changes over time. What buyers are actively looking for in the valuation depends on what comparable businesses have actually sold for, along with your company’s characteristics and current buyer demand.
Contracts, leases, and assets. Whether agreements transfer, what the lease term looks like, and the condition of the equipment all factor into what a buyer is purchasing.
Growth trends. Revenue and margins matter, especially whether recent growth has been profitable or has consumed cash to produce.
A profitable business isn’t necessarily a transferable business. A business can earn well and still give a buyer reasons to hesitate, and the valuation process is where those issues become visible.
What Could Increase the Value of Your Business Before You Sell?
Some factors that determine value are outside your control. Much of it is not.
- Reduce owner dependence by moving decisions and relationships to your team
- Improve financial documentation so the statements support the earnings without narration
- Increase recurring revenue through agreements, contracts, or repeat programs
- Reduce customer concentration where the business model allows it
- Strengthen management so responsibility sits below the owner
- Document operating procedures rather than relying on institutional memory
- Address equipment condition and lease issues before a buyer finds them
- Document and appropriately separate unusual or discretionary expenses that may be adjusted in the valuation
- Demonstrate consistent earnings over a meaningful stretch of time
None of this comes with a guaranteed return. What a valuation does is identify the issues that could affect what a buyer is willing to pay, so you can decide which ones are worth your attention and how much time you want to give them.
Why Get a Business Valuation Before You Sell?
A valuation is useful well before a sale, and often when no sale is planned at all. It lets you:
- Judge an unsolicited offer against something other than instinct
- Decide whether to sell now or give the business more time
- Plan for retirement with a realistic figure rather than an assumption
- Understand whether the business is actually ready for a buyer
- Identify weaknesses before they surface during due diligence
- Set expectations you can defend at the table
Our valuation is free because it is the first step in the business-sale process, not a product we sell on its own. You are under no obligation to list the business, and if the answer is to wait, we will tell you.
We value and sell HVAC, plumbing, electrical, and roofing companies throughout Durham, Chapel Hill, Cary, Apex, and the rest of the Triangle.
Get Your Free, Confidential Business Valuation
You don’t have to be ready to sell. Start with a confidential conversation about your business, what it may be worth, and what could affect the number.
