Knowing the true value of your business is the most critical asset in any sale process. Owners who enter negotiations without a grounded valuation often leave millions on the table. But how do you objectively value a "life's work"?
Why Your Balance Sheet Is Lying (And Why That's Good)
Most business owners make a crucial mistake: They look at their tax returns or P&L statement and think: "That’s my profit, times 5, that’s my price."
This is wrong—and usually to your disadvantage. Financial investors and strategic buyers don't buy your tax-optimized past. They buy the normalized, sustainable cash flow of the future. That is why the first step of any professional valuation is "Financial Recasting" or determining Adjusted EBITDA.
The Valuation Formula for SMBs
In the Small & Mid-Cap sector (Revenue €1M – €200M), the Multiple Method is the gold standard. Forget complex DCF models used for corporations. The formula used by Private Equity firms and Family Offices is:
Enterprise Value = Adjusted EBITDA × Multiple (Industry Factor)
Step 1: Calculating "Adjusted EBITDA"
This is where we uncover the hidden value. We "add back" all costs that a new owner would not incur. These are called Add-backs. Typical examples include:
Owner’s Compensation: Do you pay yourself €200k, but an external manager would cost only €120k? We add €80k back to your profit.
Personal Expenses: The family car, private travel, or memberships run through the business.
One-off Events: Moving costs, expensive litigation, or restructuring fees that will not recur.
Step 2: Finding Your "Multiple" (2025 Market Data)
The multiple expresses how many years of profit a buyer is willing to pay upfront. It acts as a thermometer for the risk and growth potential of your industry.
Here are realistic ranges for established SMBs in the DACH/European market:
Construction & Trade: 2.5x – 4.0x
Manufacturing & Engineering: 4.5x – 6.5x
IT Services & Agencies: 5.0x – 8.0x
Software (SaaS) / Recurring Revenue: 8.0x – 12.0x+
How to Double Your Value Before the Sale
The multiple is not set in stone. A company with high risk (e.g., one customer accounts for 40% of revenue) might trade at a 3x multiple. The same company with diversified revenue and a strong second management tier could reach a 6x multiple.
This means: You can double your exit price without increasing revenue, simply by improving your "Exit Readiness."
Conclusion: Don't Guess the Price
A valuation that is too high scares off serious buyers. A valuation that is too low costs you your retirement. Don't enter the market with a "wish price," but with a calculation you can defend.
Start your valuation now
Theory is good, but concrete numbers are better.