Business Valuation
Every Business Owner Eventually Asks the Same Question: What Is My Business Actually Worth?
Business valuation is the question that lives in the back of every owner’s head, sometimes for years, before any conversation with an advisor ever happens. You have spent two, three, four decades building this. You have signed the loan documents, met the payrolls, walked the floor at six in the morning, and watched the bank balance recover after the quarters you would rather forget. At some point, the question stops being abstract. Is it a million-dollar business or a three-million-dollar business? Is the unsolicited offer on your desk a real number or a stalking horse? Will it support the next chapter you actually want?
The truth is that most owners cannot answer that question from the inside. The bookkeeper has a number. The CPA has a number. The unsolicited buyer has a number. The online calculator has a number. They are rarely the same number, and not one of them is the number a sophisticated acquirer will defend at the LOI table. A real business valuation, done with CFA-level analytical discipline, is the only way to know the floor and the ceiling at the same time.
The CGK business brokers and M&A advisors who lead our valuation practice came out of Wall Street, institutional trading desks, hedge funds, and Fortune 500 corporate finance. We sit with you in the question before we run the analysis, and we tell you the truth about the number when we do.
We love when you call, though we spend most of our time on the phone closing deals for owners like you. The form below is the fastest way to reach Greg Knox directly. He replies within one business day, usually much sooner.
🔒 Strictly confidential. Direct routing to Greg Knox, not a junior screener. We never share inquiries with anyone.
Inside the Blueprint
CGK Business Sales was featured on Inside the Blueprint, the syndicated business television series. Our segment aired on Bloomberg TV and Fox Business News. CGK is one of the few firms producing a defensible business valuation that a privately-held seller can compare against with a Bloomberg appearance to point to. Watch the segment, then start a confidential company valuation conversation with a senior CGK principal.
What Owners Say About Their CGK Business Valuation.
Excellent service. I was in need of a valuation for a possible acquisition. Greg was extremely thorough. All my questions were answered in a timely manor. I couldn’t be happier with the results. Thank you for all you do.
Darin LaFonHad an expert evaluation of my company. Greg was smart and up front with answering all my questions and concerns. Great service.
Nicolas RainesGreg did a excellent job. He explained us every detail about the valuation. We had no idea at the beginning, however, we learned a lot with his guidance. He answered all the questions and concerns. CGK Business Sales is one of the best valuation companies in DMV. They have great customer service.
Tuncer TurkerI contacted CGK Business Sales to complete a valuation for my late father’s business. They were extremely knowledgeable and turned around an accurate valuation in record time. They took the time to walk me through all items they completed so I fully understood how they landed on the final numbers. Also, I can’t say enough about Greg. He played a huge part in me selling my father’s company. He gave me invaluable contacts that were honest, forthright and experts in their fields. I would highly recommend CGK Business Sales, Greg and his team to family members, friends and people I do not know. If you need help do it right the first time and contact the right people. These guys are the right people.
Kristin ChaumontFree vs Paid Business Valuations.
Not every owner needs the same business appraisal product. CGK runs two distinct valuation engagements, sized to two distinct decisions. The first one is free. The second is fixed-fee. Most owners need the first one first.
Free Verbal Business Valuation
Who it is for. Owners seriously thinking about selling on any horizon. A year, five years, longer. The free verbal walkthrough is the right starting point for anyone who wants to know what your business is worth, floor and ceiling, before deciding whether and when to go to market.
What you get. A working session with a senior CGK principal, in person or by screen-share, walking through the model calibrated to your industry. You see the comparable transactions, the multiple band, the EBITDA or SDE adjustments, and the math behind the range. You leave with a verbal range and a clear sense of next steps.
- CFA-led analytical walkthrough
- Comparable transaction screen in your industry
- EBITDA or SDE add-back review
- Verbal range with floor and ceiling
- No commitment, no sales pressure
Paid Formal Written Business Valuation
Who it is for. Owners who need a defensible written business valuation memo for a third party. IRS estate filings, partnership buyouts, SBA loan documentation, formal litigation, ESOP work, and gift-tax matters all require a written valuation analysis that holds up under independent scrutiny.
What you get. A fixed-fee written report with all three approaches (asset, income, comparable transactions), a guideline-public-company cross-check where relevant, an executive summary, a clear methodology section, and a specific recommendation. If you later engage CGK to sell the company, the written report fee credits against the success fee.
- All three valuation approaches applied
- IRS-defensible documentation standard
- DLOM and minority-interest discounts where applicable
- Methodology section that survives independent review
- Fee credits against future sell-side success fee
Not sure which engagement is right for valuing a business at your stage? Start a confidential conversation and a senior CGK principal will tell you which one fits your situation in the first ten minutes.
When You Actually Need a Business Valuation.
A business valuation is not an academic exercise. It is a decision-support tool. The six situations below are the ones that bring most owners to a CGK conversation, and they cover the full topic cluster: how to value a business heading into a sale, what your business is worth in the open market, a defensible company valuation for a third party, the right valuation multiples for your industry, and a credentialed business appraisal for the IRS or a court. If any of them describe where you are, the first call is free and the verbal range can usually be set inside a week.
Composite Stories From a Recent Year of CGK Business Valuation Work.
The four composite stories below illustrate the four most common reasons privately-held owners actually call CGK to learn how to value a business of their size: a pre-sale strategic walkthrough years ahead of a sale, an unsolicited offer that needed a sanity check, a partnership buyout that required an independent number both sides could live with, and a federal estate filing that needed IRS-defensible documentation. Names, industry details, and locations are composited. The structural patterns are real.
Walter Mendelson Was Five Years From Selling and Wanted to Know Where He Stood.
Walter built his pediatric dental practice across two locations over twenty-six years, anchored by a north Phoenix location he opened in 2000 and a Scottsdale satellite he opened in 2011 after a long courtship of the local pediatric referral network. By the time he called CGK, the practice was running two-point-four million in revenue with three associate dentists, a hygiene mix that was running lighter than the industry benchmark, a patient chart base that had been quietly aging, and a Scottsdale lease structure his bookkeeper had been running through a side LLC he had set up for an unrelated real-estate project a decade earlier. Walter was fifty-eight years old, his wife wanted three months a year in their Oak Creek Canyon place outside Sedona, and he had been thinking about a four-to-five-year glide path to a sale.
The first conversation was a free phone call, forty-one minutes. Walter had been quoted everything from one-point-eight million from a Phoenix general broker who had cold-called him at the practice the prior spring, to three-point-five million from an online calculator a colleague at the Arizona dental association had forwarded around the listserv. He did not know which number was real. He did not know whether he was a two-million-dollar practice or a three-and-a-half-million-dollar practice, and the spread was enough that the next chapter of his life was sitting in the gap. CGK offered a free verbal valuation walkthrough. Walter took it.
The walkthrough worked through the model on screen-share. CGK pulled comparable pediatric dental transactions in the western U.S. across the trailing twenty-four months from the M&A databases the firm subscribes to, calibrated for two-location pediatric practices in the SDE band Walter was running, and ran the multiple math live. The verbal range came in at two-point-eight times to three-point-two times SDE, putting Walter’s practice at a one-point-seven-million to two-point-oh-million range. The drag on the multiple was the lighter hygiene mix (industry benchmark hygiene production is roughly twenty-eight to thirty-two percent of revenue; Walter’s was running closer to nineteen percent), the aging chart base (the practice’s average patient was four years older than the pediatric industry benchmark, which signaled the chart was not refreshing fast enough), the commingled Scottsdale lease running through the side LLC, and a small amount of associate-comp drift that had crept in over the prior three years as the associates’ production grew.
CGK identified four operational levers that could lift the number twenty-five to thirty-five percent over a twenty-four-month runway. One, recruit a second hygienist and lift hygiene production to industry benchmark. Two, novate the Scottsdale lease into the practice entity so a buyer’s diligence team could see a clean rent line. Three, scrub the side LLC out of the practice P&L and surface the clean SDE. Four, reset the associate-comp ratchets back to industry benchmark and rebuild the bench math. Walter implemented three of the four (he never got to the fourth associate-comp piece because one of the associates accepted a partnership offer at a competing group before he could). Two years later, CGK ran a no-charge refresh of the verbal range. The new band came in at a two-point-six-million headline. Eighteen months after the refresh, a regional DSO that had been quietly building a Phoenix pediatric platform reached out. CGK had not formally listed the practice, but the operational cleanup work had made it pickable. The transaction closed at two-point-five-five million, roughly twenty-five percent above the original two-million ceiling. The free walkthrough had cost Walter zero and had paid for itself five times over by the time the wire hit. The CFA-led analysis, run on the original call, was the thing that had made the runway visible in the first place.
“I came in thinking I needed a number. What I actually needed was four years to make the number bigger. The free walkthrough showed me both.”
Caroline Reyes Had an Unsolicited Offer on Her Desk and Needed a Second Set of Eyes.
Caroline took over the family commercial HVAC firm after her father stepped back in 2014. By 2026, she had grown the firm from a four-truck operation into a thirty-eight-employee commercial mechanical services business serving west Houston, the Energy Corridor, and a meaningful book in Katy and Cinco Ranch. Revenue was six-point-two million, EBITDA after proper add-backs was one-point-one million on a seventeen-and-seven-tenths-percent margin, and three multi-year service agreements with a downstream energy company, a regional medical-office REIT, and a Class-A office portfolio anchored the recurring side of the book. Caroline had a senior service manager named Ramon who had been with the family for sixteen years, four lead technicians in named roles, and a dispatcher named Margaret who knew every building manager by first name.
The trigger was a single LOI dropped on her desk on a Wednesday afternoon. A PE-backed strategic acquirer running a Sun Belt commercial mechanical rollup had reached out through a Dallas-area associate, taken Caroline to dinner twice, asked for two years of tax returns, and dropped a four-and-a-half-million-dollar LOI keyed to a four-times-EBITDA headline. The LOI requested forty-five days of exclusivity. Caroline did not have an M&A advisor. She had a long-time CPA, a long-time attorney, and a quiet feeling that the number was low. Her CPA suggested a CGK call before she signed anything.
The first conversation with CGK was a free phone call, fifty-three minutes. CGK suggested moving to a brief engagement letter to allow a full free verbal valuation analysis under confidentiality, no charge, no commitment. Caroline signed it. The walkthrough surfaced three problems with the unsolicited offer. First, the acquirer was using as-reported EBITDA at roughly nine-hundred-and-twenty thousand and missing one hundred and eighty thousand of add-backs Caroline was entitled to defend. Her brother’s no-show consulting role (one hundred and ten thousand), her personal vehicle on the company’s truck book (eighteen thousand), her wife’s part-time bookkeeping role (twenty-six thousand), and a one-time legal settlement from 2024 (twenty-six thousand) were all legitimate normalization items the acquirer’s diligence had glossed over. The adjusted EBITDA was one-point-one million, not nine-hundred-and-twenty thousand. Second, commercial mechanical services with multi-year contracted recurring revenue in the Sun Belt was running at five-and-a-half to seven-and-a-half times EBITDA in the strategics-led 2026 market, not four. CGK pulled twelve comparable transactions in the trailing twenty-four months across the southwestern U.S. and walked Caroline through the math on screen-share. Third, the three multi-year service agreements were a recurring-revenue premium driver the LOI had completely ignored. A clean recurring book in commercial mechanical services routinely commands a half-turn to a full turn of multiple uplift in the same buyer pool.
The CGK verbal range came in at six-point-five-million to eight-point-two-million. CGK gave Caroline two recommendations. Option one, decline the LOI cleanly, engage CGK on the sell-side, and run a structured process across forty to sixty qualified acquirers. Option two, counter the original PE strategic at seven-point-eight million with a thirty-day exclusivity ceiling, no diligence fee floor, and a hard cash-at-close floor of eighty-five percent. Caroline picked option one. CGK ran the structured process across the spring and summer. About 160 acquirers signaled interest off the blind teaser. Ninety-four signed NDAs. Nine LOIs landed. The original PE suitor signed an NDA and landed in the LOI mix at the fifth-highest headline of the nine. The pool was the structural mix commercial mechanical services in the Sun Belt tends to draw at this size band: a handful of HNW operator-investor buyers with commercial mechanical theses, a couple of search funders, the heaviest concentration from PE-backed home services and commercial services rollup platforms, several strategic acquirers including two large national mechanical contractors, and a couple of family offices. Three LOIs advanced. Caroline picked the highest headline. The deal closed at seven-point-six million, eighty-six percent cash at close, eight percent escrow over twelve months, and six percent rollover equity in the consolidator’s HoldCo. The unsolicited offer would have left three-point-one-million dollars on the table. The free walkthrough that revealed the gap took CGK one screen-share and an afternoon to produce.
One warning the composite story makes plain. Unsolicited offers from PE-backed acquirers are routinely thirty to forty percent below the fair market value of a business with this profile. The acquirer is using as-reported financials, pricing in zero competitive pressure, and counting on the seller’s lack of recent M&A market data. A free verbal walkthrough is the cheapest insurance an owner can buy when an unsolicited offer hits the desk.
“I almost signed the LOI. The free walkthrough took less than a week and was worth three-point-one million dollars.”
Drew Kowalski and Maria Vargas Needed a Number Both Partners Could Live With.
Drew and Maria met in the culinary program at a Nashville community college in 2013, started the specialty foods business in 2014 out of a shared commissary kitchen in East Nashville, and built it over eleven years into a four-million-dollar specialty foods manufacturer with regional grocery distribution across Tennessee, northern Alabama, and middle Kentucky. The partnership structure was sixty-forty (Drew sixty, Maria forty), reflecting the larger initial capital contribution Drew had made out of a small inheritance. By 2026, the business employed twenty-two W-2 staff, ran a commissary in East Nashville and a second packaging facility in Madison, and supplied a regional grocery chain that represented thirty-eight percent of revenue (the top customer concentration risk a sophisticated buyer’s deal team would flag immediately). SDE was seven-twenty thousand. EBITDA was five-eighty thousand on a margin profile typical of specialty foods at this scale. In late 2025, Drew told Maria he wanted to take chips off the table and step back to a non-operating role. Maria wanted to keep operating and was prepared to step into the CEO chair.
The partnership had a buy-sell agreement, but the formula in it had been written in 2014 and was wildly out of date. Drew and Maria each pulled a number from an online rule-of-thumb calculator the week of the conversation. Drew’s came back at three-point-nine million enterprise value. Maria’s came back at five-point-five million. Both partners knew that whatever number they negotiated bilaterally would create resentment unless an independent credentialed third party put a defensible stake in the ground. The Nashville-based attorney advising the partnership referred them to CGK for a formal written company valuation.
CGK engaged on a fixed-fee written report. The work applied all three valuation approaches: the asset approach (book value adjusted for the market value of the East Nashville commissary build-out and the packaging equipment in Madison), the income approach (a discounted cash flow model and a capitalization-of-earnings cross-check, both calibrated to specialty foods comps in the Southeast), and the comparable transactions approach (twelve specialty foods M&A transactions across the trailing thirty-six months screened for revenue band, product mix, and regional grocery concentration). A guideline-public-company cross-check was added against three publicly-traded specialty foods companies adjusted for size, growth, and leverage. The CFA-led analysis normalized three years of P&L, isolated the legitimate add-backs (Drew’s wife’s part-time role, a one-time co-packing contract that had run hot in 2024, the personal-vehicle line that had run through the company truck book), and accounted explicitly for the customer-concentration discount the thirty-eight-percent top-retailer exposure warranted in any sophisticated buyer’s pricing model.
The memo landed at a four-point-two-million-dollar enterprise value with a clear methodology section, an executive summary, a one-page sensitivity table showing how the number would move under stress scenarios (top retailer cut volume twenty percent, top retailer renegotiated price five percent, top retailer churned entirely over twenty-four months), and a clean defensible record any third party (an auditor, a tax authority, a lender, a litigation expert) could review and reproduce. The forty-percent buyout of Maria came in at one-point-six-eight million. Both partners accepted the number on the same Friday afternoon they read the memo. The buyout was funded through a combination of an outside SBA-backed loan structured against the company’s cash flow, a small seller note from Drew to Maria as a transition gesture, and a five-year non-compete keyed to the specialty foods category that protected Maria’s continued operation. Drew stepped back to a non-operating board seat. Maria stepped into the CEO chair on January first. The business continues to operate today, with two new private-label contracts Maria closed in the first nine months of her CEO tenure that have begun to dilute the top-retailer concentration risk.
“Eleven years of building together, and the number that closed it was the one a CFA could defend in front of anyone.”
Estela Bautista Inherited Her Father’s Company and the IRS Wanted Documentation.
Estela’s father, Tomas, founded the regional logistics firm in 1989 with two used tractor units and a single dispatch line out of a south Louisville warehouse he had bought at auction. By the time he passed unexpectedly at sixty-seven in early 2026 (a heart attack on a Tuesday morning, no prior cardiac history), the company had grown into a sixty owner-operator-driver regional freight operation with an eight-acre dispatch yard near the Bullitt County line, a clean book of regional Kentucky-and-Indiana freight, a small specialty cluster running automotive-supplier just-in-time work into Toyota’s Georgetown plant, and a senior dispatcher named Walt who had been with the family since 1996. Revenue was five-point-eight million. EBITDA was nine-hundred-and-twenty thousand on a fifteen-and-nine-tenths-percent margin. The family had been functioning, not preparing. There was no buy-sell agreement, no estate plan beyond a basic will, no formal business appraisal on record. Estela and her two siblings, neither of whom worked in the business, inherited the company in equal thirds.
The estate attorney who had drawn up Tomas’s will called Estela the week of the funeral. The federal estate tax filing required a fair market value business valuation of the company as of the date of Tomas’s death, supported by all three approaches and proper application of DLOM (discount for lack of marketability) and minority-interest discounts on the individual sibling shares. Estela had heard wildly different numbers from people in her father’s orbit in the two weeks since the funeral: her father’s long-time CPA, working from a rule-of-thumb in his head, had told her the company was probably worth three million. A regional competitor who had attended the funeral had quietly approached her at the reception and floated four-and-a-half million as an all-cash offer. An online calculator a cousin had run on a Sunday afternoon had spit back seven million. The estate attorney told Estela none of those numbers would survive an IRS review, and that the estate needed a credentialed third-party formal written report produced to the standard the IRS expects for federal estate filings. He referred the family to CGK.
CGK engaged on a fixed-fee formal written report for the estate. The work applied the asset approach (book value adjusted for the appraised market value of the eight-acre Bullitt County dispatch yard, which had appreciated meaningfully since Tomas had bought the parcel in 1994), the income approach (DCF and capitalization-of-earnings, both calibrated to regional trucking comps in the Midwest and to middle-market 3PL transactions in the broader U.S.), and the comparable transactions approach (a two-stage screen running first against regional trucking M&A in the trailing thirty-six months, then against middle-market 3PL transactions to cross-validate the multiple range). A guideline-public-company cross-check was added against four publicly-traded regional trucking and 3PL companies adjusted for size, growth, and capital intensity. The CFA-led analysis normalized three years of P&L, isolated legitimate add-backs (Tomas’s salary in excess of replacement-cost CEO comp, a one-time legal settlement, a couple of personal-vehicle lines on the company truck book), and applied a thirty-percent DLOM on the overall company plus a fifteen-percent minority-interest discount on each sibling’s one-third interest reflecting the lack of control rights inherent in a one-third position.
The memo landed at four-point-eight million enterprise value at the date of death, with each sibling’s one-third interest valued at roughly nine-hundred-and-twelve thousand after the DLOM and minority-interest discounts. The estate attorney filed the federal estate tax return with the CGK memo attached as supporting documentation. The IRS accepted the analysis without challenge or audit. Eighteen months later, with Walt continuing to run dispatch and Estela having taken a part-time involvement role to keep the family interest active, Estela and her siblings decided to sell. They engaged CGK on the sell-side. The CFA-led work refreshed the analysis to reflect two more years of growth, a synergy uplift adjustment for a strategic 3PL acquirer, and the natural multiple expansion in regional trucking that had occurred between 2026 and 2028. CGK took the company to market at a five-point-four-million target. The transaction closed at five-point-two-five million to a strategic 3PL acquirer with a Midwest rollup thesis, eighty-three percent cash at close, ten percent escrow over eighteen months, and seven percent rollover. The written estate analysis had also served as a defensible floor for the sale process eighteen months later. Both engagements were anchored by the same CFA-led methodology. The estate work paid for itself the first time when it cleared the IRS, and a second time when it set the floor on the sale price.
“My father did not leave us a plan. He left us a business. CGK gave us the number we needed for the IRS, and then the number we needed for the buyer.”
If any of these four owners sounds like you, start with a free business valuation.
The four composites above are different industries, different sizes, different triggers, different deliverables. They are the same engagement, run the same way, by senior CGK principals. The first conversation is free. The verbal valuation walkthrough that follows is free for any owner seriously thinking about selling on any horizon: a year, five years, longer.
Confidential. No obligation. Direct routing to a named principal.
Get a Free Business Valuation
A senior CGK principal will respond within one business day. For privately-held owners with $1.5M+ in annual revenue.
How We Determine What Your Business Is Worth.
CGK applies three independent valuation approaches on every formal business valuation engagement and on every verbal walkthrough where the structure warrants. The three approaches triangulate the number. No single method is sufficient on its own. A defensible analysis respects the differences between them, weighs the right valuation multiples against the right cash-flow modeling, and explains why one method weights heavier than another given your industry, size, and growth profile.
Asset Approach
Built off the company’s balance sheet, adjusted to market value. Tangible assets (equipment, real estate, inventory) are revalued. Intangible assets (brand, customer base, proprietary processes) are added where defensible.
Best for: Asset-heavy businesses, holding companies, real-estate-anchored operators, and floors on distressed situations.
Income Approach
Discounted cash flow modeling and capitalization-of-earnings analysis, both keyed to normalized EBITDA or SDE. The income approach is where most of the action sits in a privately-held operating company valuation.
Best for: Operating companies with stable to growing cash flows, recurring-revenue books, and businesses with defensible normalization stories.
Comparable Transactions Approach
Multiples drawn from recent M&A transactions in the same industry and size band. CGK subscribes to the institutional M&A databases buyers and sponsors use to underwrite their own offers.
Best for: Active M&A industries with sufficient transaction depth (home services, healthcare, professional services, federal contracting, distribution).
Each approach is documented in detail in the three sections below. CGK’s CFA-led work follows the institutional standards published by the AICPA Forensic and Valuation Services, the National Association of Certified Valuators and Analysts (NACVA), and the broader institutional valuation community.
Asset Approach to Business Valuation.
The asset approach to business valuation starts with the company’s balance sheet and adjusts every line to the fair market value of the underlying assets as of the date the analysis is run. Tangible assets like equipment, vehicles, inventory, and real estate are revalued using market comparables and depreciation schedules calibrated to the industry. Intangible assets like the customer base, proprietary processes, brand equity, regulatory licenses, and assembled workforce are added where the data supports defensible quantification. Liabilities are netted out at face value or at adjusted market value where the debt instruments trade meaningfully off par.
When this approach drives the number. Asset-heavy businesses are where this method earns its keep. A regional logistics company with an owned dispatch yard, a manufacturing operation with specialized equipment that would cost three times book to replace, a real-estate-anchored hospitality operator with an owned building in an appreciating market, or a holding company structure with multiple operating subsidiaries each generating distinct cash flows. In each case, the asset approach surfaces value the income approach alone would understate, because the income from those assets is just one slice of what a sophisticated buyer is actually buying. In a company valuation built on this method, the analyst is asking what your business is worth on the strength of what it owns, not just what it earns.
When the asset approach sets the floor. Even when it is not the primary driver of the analysis, this methodology serves as a defensible floor. A buyer who walks into a conversation with an offer below the asset-approach floor is, in effect, offering less than the orderly liquidation value of the company. The seller has no economic reason to take that deal, and a credentialed business appraisal makes the floor visible to both sides of the negotiation.
Where this approach gets misapplied. Owner-operated service businesses with light asset bases are the most common place valuing a business gets misused under this lens. An accounting firm, a marketing agency, a residential real-estate brokerage, or a small professional-services consultancy is not an asset story. It is a cash-flow story. The asset approach in that situation will badly understate the value, and an analyst who leans on it for the wrong reasons will hand the seller a number that no buyer in the market will defend. CGK applies this methodology where it fits and explicitly tells the client when it does not.
Income Approach to Business Valuation.
The income approach is where most of the work happens on a privately-held operating company. The premise is simple: a business is worth the present value of the cash flows it will generate for its owner, discounted back to today at a rate that reflects the risk of those cash flows actually materializing. CGK applies the income approach in two parallel formats. The first is a discounted cash flow (DCF) model that explicitly projects revenue, normalized operating expenses, working capital, and capital expenditures forward five years and then capitalizes a terminal value. The second is a capitalization-of-earnings analysis that takes normalized trailing-twelve-months EBITDA or SDE and divides it by an appropriate capitalization rate built from comparable transactions and industry cost of capital.
EBITDA and SDE normalization is most of the income-approach work. A sophisticated analyst does not take the reported number. The work strips out everything that would not transfer to a buyer and adds back everything the owner is paying for personally that runs through the company. Owner compensation in excess of replacement-cost market comp, owner family member compensation for no-show or below-market-rate roles, personal vehicles on the truck book, personal travel and entertainment, one-time legal settlements, non-recurring litigation expenses, related-party transactions with the owner’s other entities, above-market rent in a related-party real-estate situation, below-market rent that the buyer will lose at the next renewal, and a long list of other items each get reviewed line by line. The clean number that comes out of the bottom of the normalization exercise is the number a sophisticated buyer’s deal team will price on.
The capitalization rate is where credentialed work pays for itself. Two analysts working off the same EBITDA can land on valuations a million dollars apart because they disagree about the right capitalization rate. The cap rate has to reflect industry risk, the specific company’s customer concentration, the bench depth, the recurring-revenue ratio, the regulatory environment, the geographic market, and the broader cost of capital available to acquirers in that segment. A CFA-led analyst pulls the cap rate apart into its component pieces (risk-free rate, equity risk premium, size premium, specific-company risk premium, debt-to-equity weighting) and defends each component with data. An online calculator picks a number out of a category average and hopes for the best. Sophisticated buyers will exploit the gap between those two approaches every time.
What the DCF cross-check actually catches. The capitalization-of-earnings analysis alone is a good tool for a stable-cash-flow operator. A DCF adds value when the business has meaningful expected growth, a transition in the customer base, a recent or planned capital investment that has not yet matured, or a regulatory or competitive change that will shift the cash flow profile over the next five years. The DCF is also the right tool when the buyer is going to underwrite synergies that the seller cannot. The DCF is not magic. It is just a more honest way to acknowledge that the future is not a copy of the trailing twelve months.
Comparable Transactions Approach to Business Valuation.
The comparable transactions approach is the one that buyers and sellers actually talk about at the LOI table. Both sides are looking at the same M&A database screens, citing the same recent deals, and arguing over the same valuation multiples. A defensible analysis works in the same data the buyer’s deal team is working in, and CGK subscribes to the institutional M&A databases that the buy-side uses. We pull recent transactions in the same industry, screen for revenue band and EBITDA band that bracket the subject company, and back out reasonable transaction multiples from disclosed deal economics.
Why industry specificity matters. A “home services” multiple does not mean much. A multiple drawn from twelve commercial mechanical services transactions in the Sun Belt with recurring service-agreement bases above thirty percent of revenue, average EBITDA between eight-hundred-thousand and one-point-five million, and closed in the trailing thirty-six months means something. The buyer’s diligence team will work at that level of specificity, and a credentialed analysis has to match it. CGK’s approach is to start with the broad industry screen, narrow by revenue band, narrow again by EBITDA band, narrow again by growth profile and recurring-revenue ratio, and then strip out the obvious outliers (a stressed seller, a synergistic strategic that paid a premium for non-replicable reasons, a deal where rollover equity made the headline multiple misleading).
Adjusting comparable transactions to the subject company. No two businesses are identical. A real comparable-transaction analysis adjusts each comp to the subject. Customer concentration discount (if your top customer is forty percent of revenue and the comp’s top customer was fifteen percent, the comp multiple gets adjusted down before it is applied to your company). Recurring-revenue premium (if your maintenance-agreement base is forty-five percent of revenue and the comp’s was eighteen percent, the comp multiple gets adjusted up). Geographic premium (some metros are running hotter than others for a given industry). Owner-dependency discount. Bench-depth premium. Each adjustment is defended in the methodology section of the written report.
When the comparable transactions approach is the wrong tool. Some industries do not have enough recent transaction depth to support a credible multiple. Specialty niches, regulatory-constrained operators, and one-of-a-kind businesses often need the comparable approach treated as a sanity check rather than a primary driver. In those situations, the income approach carries the weight and the comparable transactions analysis is run as a cross-check that surfaces where the income-approach number sits relative to whatever sparse transaction data exists. A credentialed analyst knows when each approach should carry the load and explains the weighting clearly.
Guideline Public Company Method (For Middle-Market Business Valuations).
What does a sophisticated investment banker actually look at when sizing a privately-held company in the lower middle market? For companies running roughly $10M to $100M in revenue and $1M to $10M in EBITDA, the Guideline Public Company Method, often called GPCM or “public trading comps” by investment bankers, draws valuation multiples directly from publicly traded companies in the same industry as the business being valued. The trading multiples of those public peers (typically EV / Revenue, EV / EBITDA, and sometimes EV / EBIT) become the starting point for sizing your private company’s worth and triangulating with the income and comparable transactions approaches already in the analysis.
Public-company multiples cannot be applied directly to a private company, and a defensible business valuation never pretends otherwise. Two reasons matter here. First, public stock can be sold in seconds, while private equity in a privately-held company can take six to twelve months to sell once a structured process is launched. Second, public companies are typically larger and more diversified than the businesses CGK values for owners in the High Main Street and lower-middle-market bands. To get from a public-comp multiple to a defensible private-company number, two well-established discounts get applied before the EV / EBITDA or EV / Revenue ratio is multiplied against your normalized numbers.
The Discount for Lack of Marketability (DLOM) addresses the illiquidity gap between public stock and private equity. Typical DLOM ranges run twenty to thirty-five percent, depending on company size, profitability, customer concentration, and the strength of the financial reporting. Defensible DLOMs in valuation analysis draw on the Mandelbaum factors (a nine-factor framework from a U.S. Tax Court case that the IRS recognizes when reviewing estate and gift filings), the Stout DLOM study, and the FMV Opinions restricted-stock studies. Apply the wrong DLOM and the IRS or a counterparty’s advisor will challenge the entire analysis. Apply the right one and the methodology section of the memo holds up under any independent review, which is exactly what owners learning how to value a business this size need to understand before signing a memo they will rely on.
The size discount, sometimes called the small-stock effect, reflects the well-documented finding that smaller public companies trade at lower multiples than large-cap peers. Sourced from the Duff & Phelps Cost of Capital Navigator size studies (now published by Kroll), the adjustment typically reduces public-comp multiples by another five to fifteen percent before they’re applied to a private middle-market business. Together, DLOM and the size discount commonly shave twenty-five to forty-five percent off a raw public-comp multiple. Stack them backward and you overshoot the number. Stack them too aggressively and you understate it. The Kroll size studies and the Mandelbaum framework are the institutional references that keep the math honest.
This is where CGK’s competitive moat shows up plainly. Most business brokers cannot talk credibly about DLOM, the Mandelbaum factors, or the Duff & Phelps size studies, because they have never worked inside an institution that priced anything off public trading comps. CGK’s managing principals trained on this work at Deutsche Bank, T. Rowe Price, Wachovia, and the institutional trading desks they came from. Greg Knox holds the CFA charter, the credential that signals serious training in valuation methodology, equity analysis, and the math behind cost of capital. For middle-market business valuation work, that institutional pedigree is what separates a defensible number from a guess.
Why Rules of Thumb and Online Calculators Get It Wrong.
Every owner has heard a rule-of-thumb answer to how to value a business at some point. “Your industry is three times SDE.” “Insurance agencies sell for two times revenue.” “HVAC trades at five times EBITDA right now.” The shortcuts are popular because they are easy to remember and impossible to defend. Here is why they cost owners real money.
The rule of thumb collapses every business in a industry into a single average. Your company is not the average. A residential HVAC firm with a forty-percent recurring maintenance base, two senior service managers with comp-step protections, and a north Phoenix submarket with rapid population growth is not the same operation as a residential HVAC firm with no recurring book, one operator-dependent technician, and a flat-demand secondary market. Both might come up in the same industry category. Both will draw very different multiples in the same buyer pool. Real analytical work distinguishes them. The rule of thumb does not.
Online calculators do not know your add-backs. The calculator takes whatever number you type into the EBITDA field. It does not know whether your brother’s no-show consulting role is in there. It does not know whether your personal vehicle is on the truck book. It does not know whether your wife’s part-time bookkeeping role is being paid market or twice market. It does not know whether last year’s one-time legal settlement is sitting in the operating expense line. The clean normalized number that drives a real range is the output of a working session with a credentialed analyst, not the output of a web form.
Industry averages reflect the median deal, not the deal you would actually do. The published industry multiples in IBBA reports, industry trade-press summaries, and industry trade-press surveys are useful as context. They are not the answer to your specific question. They reflect the median seller who took the median offer, often after a poorly-run process that left value on the table. The deal a CGK-led structured process produces routinely sits in the top quartile of the published range, because the multiple in the report does not separate well-run processes from owner-led listings. A defensible analytical floor accounts for the difference.
Sophisticated buyers will exploit a soft number every time. If you walk into an LOI conversation with a calculator number, the buyer’s deal team knows it within the first ten minutes. They will price the deal to whatever ceiling the calculator implies and structure the terms around the seller’s lack of analytical leverage. CFA-led analysis produces a number the seller can defend at every turn of the diligence process. The defense is what holds the price up between LOI and wire. A soft number becomes the ceiling. A defensible one becomes the floor.
The rule of thumb is free. The cost shows up at closing. An owner who relies on a calculator and a rule of thumb to set expectations going into a sale process routinely leaves twenty to thirty percent of the headline value on the table. On a five-million-dollar transaction, that is one-to-one-and-a-half million dollars of net proceeds the owner will never see. A CGK free verbal walkthrough costs nothing and surfaces the same gap in under a week.
Why CGK’s Business Valuations Hold Up Under Scrutiny.
The competitor field in the company valuation market is uneven. CGK’s structural advantages over generalist business brokers, franchise-broker networks, and AI-output valuation websites are visible the moment a sophisticated buyer’s diligence team starts asking questions about the methodology.
CFA charterholder leading the work. The Chartered Financial Analyst credential is the institutional gold-standard for valuation analysis. CFA Institute estimates fewer than two hundred thousand charterholders globally, and the overlap with anyone calling themselves a “business broker” is vanishingly small. Sunbelt, Transworld, Murphy, Synergy, and Generational do not lead with CFA-credentialed analysts. CGK is the rare M&A advisory and business brokerage with a CFA charterholder leading the analytical work on every engagement. When an IRS reviewer, a sophisticated buyer’s deal team, an SBA loan underwriter, an estate attorney, a litigation expert, or a board director picks up the memo and reads the methodology section, the CFA-led work survives the review.
Wall Street and corporate finance backgrounds, not residential real estate. CGK’s named principals came from Deutsche Bank, T. Rowe Price, Wachovia, Goldman Sachs, Merrill Lynch, Chevron and Shell corporate finance, the U.S. Naval Academy, Cornell, Cargill, and TD Options. The institutional-finance pedigree shows up in how the analytical work is structured, how the data is sourced, how the cap rate is built, and how the comparable transactions are screened. Competitors’ advisors are typically former business owners, residential real estate agents, or individuals with no formal finance background. The structural difference shows up in the memo.
Real deal experience under the analysis. A defensible number is not produced in a vacuum. It is produced by analysts who also run live M&A transactions and watch how the numbers actually clear the market. CGK closes roughly ninety percent of the engagements we sign. The brokerage industry average sits closer to twenty percent. The gap reflects a combination of disciplined front-end intake (we tell owners to wait or pass when the situation does not warrant a sale) and disciplined back-end deal execution. The analytical work feeds the deal flow and the deal flow feeds the analytical work. The loop is tight, and the analysis is calibrated to what the market is actually paying in the current cycle, not to what a static rule-of-thumb says it should pay.
Single firm, shared deal flow across eleven offices. CGK is one firm with shared CRM and shared deal flow across all eleven offices. A valuation analysis produced in Phoenix benefits from the live transaction data in Houston, Nashville, Baltimore, and Washington, DC. Franchise networks (Sunbelt, Transworld, Murphy, VR) are federations of independently-owned franchisees who do not share buyer pools or seller pipelines, because the franchise economic model penalizes sharing. CGK’s one-P&L structure means the multiples cited in your memo reflect the firm’s full live transaction book.
Institutional-process discipline at lower-middle-market scale. Most sellers in the one-and-a-half-million to twenty-five-million-dollar range assume institutional-grade valuation work is reserved for larger transactions. CGK applies investment-banking-grade methodology at the lower-middle-market scale, with the same analytical rigor the upper-middle-market and middle-market sponsors expect on five-hundred-million-dollar deals, sized appropriately to the deal in front of us. IBBA membership and the broader CGK national bench back the discipline.
Meet the CGK Team Behind Your Business Valuation.
Every CGK valuation analysis is led by a senior named principal start to finish. The bench below covers all eleven CGK offices, with Managing Directors specialized across valuation analytics, M&A structuring, and sector specialization. The principal who runs your first call also signs the memo.
Get a Free Business Valuation.
Submit a brief profile and a senior CGK principal will respond within one business day to schedule a free verbal valuation walkthrough, in person, or by screen-share. For privately-held owners with $1.5M+ in annual revenue. Strictly confidential. No commitment.
What to expect on the first call.
The first conversation is forty to sixty minutes. A senior CGK principal listens first. You walk through the business, the ownership structure, the trigger that brought you to the call, and the question you actually want answered. We tell you which engagement fits (free verbal, paid written, or wait six months and revisit), what the next two steps look like, and what the realistic timeline is. No pressure. No sales pitch. No commitment.
What the free verbal walkthrough includes.
If the right next step is a free verbal walkthrough, we schedule a working session inside the following week. A senior CGK principal pulls up the model on screen-share, walks you through the comparable transactions in your industry, the multiple band, the EBITDA or SDE adjustments, and the math behind the range. You leave the walkthrough knowing what your business is worth in today’s market, with a sense of where the gaps are if you want to move the final price, and a clean plan for next steps. Confidential, free, and yours to take wherever it makes sense.
If you need a written report.
If the right next step is a formal written business valuation memo (IRS estate, partner buyout, SBA documentation, ESOP, formal litigation, gift-tax matters), we walk you through the fixed-fee engagement and the timeline. Most written engagements close in three to four weeks from kickoff. If you later engage CGK to sell the company, the written report fee credits against the sell-side success fee.
Learn more about CGK sell-side engagements → · Buy-side advisory and valuation →
Start a Free Business Valuation
A senior CGK principal will respond within one business day to schedule a free verbal valuation walkthrough, in person, or by screen-share. For privately-held owners with $1.5M+ in annual revenue.
Confidential. No obligation. Direct routing to a named CGK principal, not a junior screener.
Frequently Asked Questions About Business Valuation
Practical answers to what comes up most often when privately-held owners are evaluating a company valuation engagement. Additional reading on credentialed valuation practice is available from the International Business Brokers Association (IBBA), the AICPA Forensic and Valuation Services, and the National Association of Certified Valuators and Analysts (NACVA).
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Start with a confidential business valuation conversation. No commitment.
Submit a brief profile and a senior CGK principal will reach out within one business day. The first conversation is always free, and the verbal business valuation that follows is free for any owner seriously thinking about a sale on any horizon.
Strictly confidential. No pressure. Direct routing to a named principal, not a junior screener.
Talk to a CGK Business Valuation Principal
A senior CGK principal will respond within one business day. For privately-held companies with $1.5M+ in annual revenue.
Or scroll up to the seller-profile form in any of the three valuation blocks above. Direct routing to a senior CGK principal, not a junior screener.
Confidential. No obligation.
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