Why a proper business valuation matters — and how to get one for free

Ask ten business owners what their business is worth and you'll get ten confident answers. Ask a buyer, and you'll usually get a very different number.

That gap — between what an owner thinks the business is worth and what a real buyer will actually pay — is the single biggest reason South African deals fall over. Or worse, get done at the wrong price.

The three ways owners get it wrong

We speak to owners every week. The mistakes are almost always the same three:

• "My accountant told me it's worth 4× profit." Profit is not EBITDA. And "4×" isn't a number — it's a starting point that moves up or down based on 30 things a generic multiple doesn't capture.
• "My mate sold his for R40m so mine must be worth the same." Different industry, different growth, different customer concentration, different owner-dependence. The headline number tells you almost nothing.
• "I need R25m to retire, so that's what I'll ask." The market doesn't care what you need. It cares what your business earns, how reliably it earns it, and how easily it runs without you.

Each of these leads to the same outcome: months wasted, buyers walking away, and eventually a rushed sale at a bad number.

What a proper valuation actually looks at

A real M&A valuation isn't one number — it's a defensible range built from several angles:

• Normalised EBITDA. Your reported profit, adjusted for owner's salary, personal expenses run through the business, one-off costs, and non-recurring revenue. This is the number a buyer will use — not what's on your income statement.
• A multiple that reflects your business, not an industry average. Recurring revenue, customer concentration, growth rate, gross margin, owner-dependence, and the quality of your management team all move the multiple. A 5× business and a 3× business in the same industry are common.
• A cross-check against recent comparable transactions. What have similar SA businesses actually sold for in the last 18 months? Not asking prices — closed deals.
• A sanity check on the balance sheet. Cash, debt, working capital, and any surplus assets that transfer with the deal.

Put those together and you get a range — usually a low, mid, and high. The mid is what a well-run process should achieve. The high is possible with the right strategic buyer. The low is what you'll get if you sell to the first person who asks.

Why the range matters more than the number

Buyers negotiate. Always. If you walk in with a single number, you've already lost — you're either too high (and they walk) or too low (and they pay it happily).

A defensible range gives you three things:

1. A floor you won't drop below. Below this and you're better off keeping the business.
2. A realistic target. What a properly run process should deliver.
3. A stretch. What the right strategic buyer might pay for reasons that have nothing to do with your numbers.

That's the difference between selling a business and having it taken off you.

Get an indicative valuation in 60 seconds — free

We built a free valuation calculator that gives you an indicative range based on the same inputs an M&A advisor would start with: your industry, turnover, EBITDA, growth, and reason for sale. It's not a formal valuation — you'll want one of those before you go to market — but it's an honest starting point, and it's free.

Most owners are surprised. Some in a good way, some in a bad way. Either way, you'll know where you actually stand.

What to do next

If the number lands where you expected, great — you're ready to think about a process. If it lands lower than you hoped, that's useful too: you now know what to fix in the 12–24 months before you sell (usually recurring revenue, customer concentration, or owner-dependence).

If you'd like to talk it through, the first call is 30 minutes, free, and nothing to sign. We'll tell you honestly whether now is the right time to sell — and if it isn't, what to do first.