How we value a business.
Five recognised methods, run in parallel and reconciled — because a defensible valuation is a range with visible workings, not a single number handed down without explanation.
Every engagement scoped and fixed-fee quoted up front, after an initial consultation at no charge.
Five methods, run in parallel and reconciled.
No single method tells the whole truth about a private company. Each captures something the others miss, so we run several and reconcile them — and where they disagree, that disagreement is itself information that goes in the report.
Why a range, not a number
A business is not worth one figure. Different methods, applied honestly, land at different points — and the spread between them tells you how much confidence the number deserves. A tight cluster is a reliable valuation; a wide one is a warning that the value hinges on assumptions worth interrogating before you transact.
These value the business on the economic benefit it produces for its owners — the cash it can actually generate, rather than the profit its accounts report.
Free cash flow
Values the business on the cash it can generate for its owners over time, discounted back to a present value — the workhorse method for private companies, because it measures genuine economic benefit rather than accounting profit.
The method turns on two things: a credible projection of future cash flows, and a discount rate that reflects the risk of actually receiving them. Both are stated explicitly in the report.
- Best for
- Profitable, stable businesses
- Basis
- Projected cash, discounted
- Sensitivity
- Discount rate, growth
Excess earnings
Separates the return attributable to tangible assets from the profit generated by goodwill and other intangibles — brand, customer relationships, know-how.
It is particularly useful for smaller owner-managed businesses, where a large share of the value sits in intangibles that never appear on the balance sheet.
- Best for
- Owner-managed SMEs
- Basis
- Tangible return + goodwill
- Sensitivity
- Intangible earnings
These benchmark the business against real evidence from the market — what comparable companies are worth, and what buyers have actually paid for businesses like it.
Guideline public company
Benchmarks the business against listed companies using valuation multiples such as price-to-earnings or enterprise-value-to-EBITDA.
A private SME is smaller, less liquid and more owner-dependent than a listed company, so the raw multiple is discounted to reflect those differences — and those discounts are stated and reasoned.
- Best for
- Businesses with listed peers
- Basis
- Listed-company multiples
- Sensitivity
- Comparability, discounts
Guideline transaction
Draws on actual completed sales of comparable businesses — what buyers have genuinely paid for one, a different and often more persuasive question than theoretical pricing.
- Best for
- Active deal sectors
- Basis
- Comparable completed sales
- Sensitivity
- Deal recency, terms
Prior transaction
Uses the company's own transaction history — a previous equity raise, a buyout, or the sale of a shareholding — as direct evidence of value, provided those events were recent and conducted at arm's length.
- Best for
- Recent equity events
- Basis
- The company's own history
- Sensitivity
- Recency, arm's length
And an asset and liability review underneath all of it.
Every mandate includes a review of tangible and intangible assets, liabilities and off-balance-sheet commitments — both as a valuation floor and as a check on the income and market methods above.
The value below which it makes no sense
A profitable business should be worth more than its net assets. Where an income-based figure falls below asset value, that gap is a finding worth understanding.
What the balance sheet leaves out
Leases, guarantees, restraint undertakings and related-party arrangements rarely appear in the accounts and frequently move the number.
The check on everything else
Asset value provides an independent reference point against which the income and market results are sanity-checked.
Questions we're asked most.
Why use five methods instead of one?
No single method captures the whole truth about a private company. Running them together and reconciling the results produces a defensible range and a measure of how much confidence that range deserves.
What if the methods disagree?
Disagreement is information. A tight cluster of results is a reliable valuation; a wide spread signals that the value depends heavily on assumptions worth interrogating.
Which method carries the most weight?
It depends on the business. Free cash flow usually leads for profitable, stable companies; excess earnings for intangible-heavy owner-managed businesses; market methods where good comparables exist.
Do you follow recognised valuation standards?
The methods applied are the income, market and asset-based approaches recognised in professional valuation practice internationally.
Can I see the workings?
Yes. Every method applied, every material assumption, and the sensitivity of the result to those assumptions is set out in the report.
Speak to an advisor.
Tell us about your business and what you're looking to achieve. Email, WhatsApp or call us — we reply within one working day, at no charge and no obligation.
- A fixed-fee proposal in writing before any work begins
- Every enquiry read personally, not routed through an assistant
- Treated as confidential, with no obligation
“A valuation should tell you where the value comes from — not just what the number is.”
MJ Hartman, Founder