What your business is worth today and what it will sell for are two different numbers.
The gap between them is the most valuable figure in any exit — and the one owners discover too late. Closing it is the work, and it takes 12 to 18 months. Here's an honest read on where you stand.
Why two businesses with the same earnings sell for different money
A company clearing two million in earnings doesn't sell for twice one clearing a million. It often sells for several times more. The reason is the multiple. Scale, clean records, recurring revenue, and independence from the owner all lift the multiple a buyer will pay — not just the earnings the multiple gets applied to.
That's why preparation is where the real money is made. A difference of $200,000 in your defensible earnings, at a 5× multiple, is a million dollars at closing. The same business, sold reactively the day a buyer appears versus sold after eighteen months of preparation, can carry a materially different price. The earnings barely changed. The readiness did.
1×Under $500K. Owner is the business. Sells on assets, if at all.
3×$500K–$2M. Real earnings, real gaps. Multiple starts to move.
5×$2M–$10M. Systems, not heroics. Buyers compete.
10×+$10M+. Runs without you. Strategic buyers pay up.
Illustrative. Multiples vary by industry and company. The point is the shape: value compounds as a business gets bigger, cleaner, and less dependent on its owner.
Seven questions
Where do you stand?
Answer honestly — this is for you, not for a buyer. Nothing is stored or sent.
Could the business run for 60 days without you in it?
Owner dependence. If the business is you, a buyer is purchasing a job, not a company — and they discount hard for it. This is the single biggest lever on your multiple.
Does any one customer make up more than 15% of revenue?
Customer concentration. When one client can sink the year, a buyer prices in that risk. Diversifying the book before a sale is slow work, which is why it has to start early.
Are your last three years of financials clean and on a consistent basis?
Records. Due diligence is a search for reasons to lower the price. Inconsistent or informal books hand the buyer those reasons. A clean set, ideally with your own quality-of-earnings work done first, is leverage.
Is all the IP — brand, software, content — owned by the company, not you personally?
IP ownership. Trademarks in your personal name, code from contractors who never signed an assignment — these surface in diligence and stall deals. Fixable now, expensive later.
Would your key people stay through and after a sale?
Key-employee risk. If one or two people are essential and uncommitted, the buyer wants assurances — and those conversations are far easier before a sale than during one.
Is a meaningful share of revenue recurring or under contract?
Revenue quality. Predictable revenue earns a higher multiple than the same dollars won fresh each year. Buyers pay for what they can count on.
Can your lease and key contracts transfer to a buyer without someone's veto?
Assignability. A lease or contract that needs a third party's consent to transfer hands that party leverage at the worst moment. Worth checking long before close.
These seven questions are the surface. The readiness assessment I run with the owners I work with goes a great deal deeper — and turns a list of gaps into a plan with a timeline.