Whether you’re planning to retire, preparing for succession, or just looking ahead, knowing your business’s value isn’t just helpful—it’s essential. A market-based valuation gives you the clarity to:
- Set a realistic exit timeline
- Target the improvements that enhance both value and salability.
- Plan with confidence—on your terms
No business is perfect—and that’s expected. We’ll help clean up the financials, clarify your numbers, and present your business in the strongest possible light.
How We Determine Your Business’s Market Value
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Broker’s Opinion of Value isn’t a generic number—it’s a professional, market‑informed estimate that reflects how buyers will view your business in today’s market.
LevelStar helps Colorado business owners understand what their company is worth today—backed by real data, real buyer behavior, and no‑pressure guidance.
1. Seller’s Discretionary Earnings (SDE)
Valuation starts by calculating
SDE—the true earning power available to a new owner. We start with net profit, then add back expenses that wouldn’t continue under new ownership:
- Your salary and personal benefits
- One‑time or non‑operating expenses
- Depreciation and amortization
- Owner‑specific perks (e.g., travel, auto, meals)
Simplified Example*
| Add‑Back Category |
Explanation |
Amount |
| Net Profit |
Reported on tax return / P&L |
$ 85,000 |
| Owner Salary |
Wages paid to owner |
$ 90,000 |
| Owner Perks |
Auto, meals, entertainment, phone, etc. |
$ 18,000 |
| Depreciation & Amortization |
Non‑cash accounting expenses |
$ 12,000 |
| One‑time Expenses |
Legal fees and unusual costs |
$ 7,500 |
| Total Seller’s Discretionary Earnings |
$ 212,500 |
This total shows buyers the cash flow they can reasonably expect to take over—often the most important driver of business value.
2. Comparable Sales: The Most Reliable Benchmark
We look at real-world sales of similar businesses—called
comps—to anchor your valuation in actual market behavior. These data points come from trusted databases like
BizBuySell,
PeerComps, and our own deal history.
| Comparable Factor |
Why It Matters |
| Industry & Business Model |
Buyers value sectors differently |
| Revenue Size & SDE |
Larger, profitable businesses often earn higher multiples |
| Deal Terms (When Available) |
Seller financing or earn‑outs can influence price |
3. Market Multiples: A Tool, Not a Rule
Once Seller’s Discretionary Earnings (SDE) is established, we apply a market-informed multiple—based on comparable closed transactions—to estimate value.
While the data doesn’t reveal why each deal received its multiple, we compare your business to those transactions to identify a reasonable range.
We consider factors like company size, industry, and deal structure to help interpret where your business may fall within that range.
Sample Multiple Comparison
| Example Business |
Strengths |
Considerations |
Multiple Range |
| Established Service Business |
Recurring revenue, clean books |
Some customer concentration |
2.8×–3.3× |
| Similar Business |
Steady revenue |
Owner‑dependent |
2.0×–2.4× |
*Multiples aren’t one‑size‑fits‑all; they reflect how buyers perceive your company’s risk, stability, and growth potential. Our job is to present your story clearly and credibly.
What Buyers Look For—Beyond Financials
| What Buyers Consider |
Why It Matters |
| Customer Concentration |
Overreliance on a few clients increases risk |
| Recurring Revenue |
Predictable cash flow drives higher value |
| Standard Operating Procedures (SOPs) |
Enable smoother hand‑offs and scalability |
| Owner Independence |
Less reliance on you boosts buyer confidence |
| Growth Trends |
Positive trajectory attracts a premium |
Past Performance vs. Future Potential
Buyers invest in what they can verify—but they’ll stretch when upside is
credible and
transferable.
- 24–36 months of verifiable financials
- Adjusted SDE that reflects true earnings
- Documented systems and a strong team in place
We guide you through clarifying your financials, highlighting true earnings, and showcasing operational strength—so buyers see a business they can step into with confidence.
Upside Buyers Pay For
| Growth Opportunity |
Credibility Proof |
| New or Recurring Contracts |
Signed agreements, high renewal history |
| Expansion Potential |
Scalable infrastructure supports growth into new markets |
| Team‑led Operations |
Documented SOPs, cross‑trained staff |
| Industry Tailwinds |
Data‑backed demand trends |
Buyers don’t pay for wishful projections—but they will stretch when growth is proven and transferable.
Common Valuation Myths That Cost Owners Money
| Myth |
Reality |
| “I’ll just use the industry average.” |
Multiples vary with size, systems, and perceived risk. |
| “Revenue equals value.” |
Buyers pay for earnings, documentation, and transferability. |
| “The buyer will fix my issues.” |
Most buyers want turnkey operations; loose ends lower offers. |
| “I can’t plan until I’m ready to sell.” |
Early planning protects value and expands options. |
Ready to Benchmark Your Value?
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Broker’s Opinion of Value from LevelStar gives you clarity—without pressure or obligation.
All consultations start with a signed Confidentiality & Non‑Disclosure Agreement to protect your information.
