If you’re even considering selling your business, you’ve probably wondered what you can do to increase your valuation before going to market.
While no single tactic is guaranteed to boost your valuation, there are a few predictable ways to position your business for a stronger outcome.
In this week’s newsletter, we’ll break down:
- 3 key drivers that move valuation in your favor
- 2 frameworks to help you assess and enhance your company’s value
- 1 action step you can take this week to move the needle
3 Key Drivers That Can Increase Valuation
1. Recurring revenue
Buyers pay premiums for predictability. Whether it’s formal contracts or deeply embedded client relationships, recurring revenue gives buyers confidence the business will keep performing after you leave.
2. Owner Independence
Transferrable value comes from systems, people, and processes. For a higher valuation buyers want to see that the business has the structures in place to run without you.
3. Customer & vendor diversity
Too much revenue concentrated in one or two accounts is a red flag – the same goes for critical vendors. Spreading both out reduces perceived risk and increases value.
2 Frameworks to Unlock Value
The Value Builder Lens
This framework asks: What would make this business more valuable without me here? It’s a simple shift to start thinking like a buyer. Use it to examine your leadership depth, process documentation, and any operational bottlenecks that might bring down your valuation.
The “3 Legs of the Stool”
One of the simplest ways to evaluate, and improve, the value of your business is to examine it through what I call the “3 Legs of the Stool”. Buyers are looking for stability in three key areas of your business.
Financial: Clean books, growth trends, and strong margins.
Operational: The systems and processes in place.
Strategic: Market position and growth potential.
Ideally your business should be strong in all three areas prior to going to market. If not, this framework points you towards what to focus on.
List Of Our Completed Transactions
1 Action Item This Week
Create a “Response Plan” for future offers
Review your revenue sources. Block 30 minutes to get clarity on what percentage of revenue is recurring and how dependent you might be on a single customer or vendor. Even a simple review like this can uncover risk areas that can meaningfully increase valuation.