Start with the purpose
A valuation for early sale planning is not the same thing as a formal tax, dispute or statutory valuation. Define the decision first and know when professional advice becomes necessary.
1. Clean the financial history
Collect reliable revenue, profit, cash and debt information. Identify exceptional items rather than relying on a single headline profit number.
2. Normalise earnings carefully
Document genuinely non-recurring or owner-specific items that another party may challenge. Do not remove normal costs simply because doing so raises the valuation.
3. Choose the earnings measure
Understand whether SDE, EBITDA or another measure is appropriate to the business and transaction. Keep the calculation consistent.
4. Apply a defensible multiple range
Use genuinely comparable evidence where available and calculate a range rather than treating one multiple as exact.
5. Account for debt and cash
Where the method produces enterprise value, consider the debt/cash position and deal structure when moving toward equity value.
6. Cross-check with DCF where appropriate
Forecast cash flows, make the discount and terminal assumptions explicit, then stress-test them. Small assumption changes can materially change DCF output.
7. Build the evidence pack
Keep the earnings bridge, assumptions, comparable evidence, debt/cash position and risk factors together so another person can follow the logic.
What to do next
Use the Business Valuation Preparation Guide to organise the inputs and judgement calls, then use the JEBS Business Valuation / DCF Model to run the detailed valuation calculations.