A plain-language walkthrough of how valuation actually works — before you talk to any broker, including us.
Most owners anchor on revenue. Buyers anchor on cash flow. That gap is where most valuation disagreements start.
For businesses under roughly $5M in revenue, buyers typically value on SDE — your pre-tax profit plus your own salary, benefits, and one-time or personal expenses run through the business. Add those back and you usually get a meaningfully higher number than what shows on your P&L.
Home services businesses with strong recurring maintenance revenue and a management layer independent of the owner tend to trade at higher multiples than a business where the owner is still doing every estimate personally. Digital/SaaS businesses are valued more on ARR and net revenue retention than SDE alone once they cross a certain scale.
The single biggest lever on your multiple isn't your revenue — it's whether the business can run without you for 90 days. Owners who build a real management layer 12–24 months before a sale routinely see meaningfully better outcomes than owners who wait until they're burned out to start preparing.
Want an actual number instead of a rule of thumb? Request a valuation call — we typically turn around an initial range within days.