This page is for the owner of an established, founder-led company in Miami or South Florida who has not yet decided whether to sell. It covers the valuation that comes before that decision. If you share ownership and your co-owner sees a sale differently, start with our guide to co-owners who disagree about selling.
Do you need a valuation before deciding to sell?
Usually, yes, and the useful kind at this stage is a private estimate prepared for your own decision. It gives you a supported range to set beside what you want next, so a buyer's interest or a broker's opinion is measured against something you already understand. Commissioning an estimate does not commit you to selling. Have your attorney read the engagement terms before you sign, including what you owe and any limits on using or sharing the result.
Get it before you commit to a sale process and before you state a price to a buyer. An adviser you are considering may comment on the scope of the work, provided the estimate itself comes from someone with no stake in your decision. Your accountant can assemble the records and tell you whether a valuation specialist is needed. Then compare what a sale might leave you with what continued ownership gives you, including the income, the work, the personal guarantees you carry and the investment the company would need if you kept it. Our guide to whether to sell or keep building covers that wider decision.
What are the kinds of valuation, and what is each for?
Founders use one word for several different exercises, so start with the decision the valuation must support and then agree the scope with the preparer. A private estimate helps you decide whether to sell. A figure used in negotiation informs a proposed transaction, and the price is whatever buyer and seller agree. A legal or tax matter, an ownership agreement or a lender may impose its own valuation requirements. A figure prepared for one purpose is not automatically fit for another.
The rows below overlap. A private decision may justify a full independent valuation, and a limited analysis that leaves procedures out can produce a different result from a full one.
| Kind | Who usually prepares it | What it is for | What to watch for |
|---|---|---|---|
| The owner's own estimate | The owner, with the company's accountant | Organizing expectations and finding gaps in the records | Hopes and unsupported adjustments to earnings can shape the result |
| A limited-scope estimate | An accountant with valuation experience, or a valuation professional | A narrower analysis agreed in advance, which may be enough for an early decision | Ask which procedures were left out and what that means for how you use it |
| A full independent valuation | An independent valuation professional | A supported conclusion under a defined scope and standard of value | Its usefulness depends on the purpose and assumptions written into the engagement |
| A broker's or adviser's opinion of value | Someone who would like to handle the sale | A view of how the market might receive the company and how a sale could be run | The person preparing it has a commercial interest in your decision |
| A valuation for a tax, estate or legal purpose | A valuation professional instructed for that use | The specific use your attorney and tax adviser identify | It may be unsuitable for any other purpose, including your decision to sell |
| A figure from a buyer | The prospective buyer or its advisers | That buyer's view of a possible purchase | It reflects the buyer's interests and may rest on conditions still unresolved |
A preparer should describe the method in words you can follow. Some approaches look at the earnings or cash the company is expected to generate, and others compare sales of similar businesses or work from what the company owns and owes. Ask why the approach fits your company and what evidence supports it. Where the scope is narrower than a full report, ask the preparer to state in the engagement letter which procedures were left out.
Is a valuation the same as the price a buyer will pay?
A valuation estimates value under stated assumptions. A price is what a particular buyer agrees to pay on terms it negotiates with you. A buyer forms its own view from its plans for the company and its reading of the risk, and competition between buyers can move that view. No valuation can promise the outcome of that process.
When someone seeking your sale mandate offers an opinion of value, ask how that commercial interest affects it. The opinion may hold useful market judgment, so ask what supports it and how the person is paid if you appoint them and if a sale closes. A figure prepared for a buyer serves that buyer. Our guide to choosing a business broker or M&A adviser covers who handles a sale if you decide to run one.
The headline figure also differs from what you keep. Ask your advisers whether a figure describes the whole business or the owners' shares, and how it treats the company's cash and debt. Then have them work from it to your possible personal proceeds without counting any adjustment twice, separating cash at closing from deferred or conditional payments and allowing for tax and transaction costs. A payment that depends on future results may never arrive. Ask as well what cash must stay in the company and whether you would keep an ownership interest you could not sell when you chose.
Who should prepare your estimate, and what should you ask them?
For the private decision we would choose someone with valuation experience and no stake in whether you sell. Ask directly about any relationship with likely buyers and any fee they could earn from later transaction work. Agree in writing the purpose of the work, the valuation date and who may rely on the result. Make sure the engagement lets you discuss the result with your attorney and tax adviser.
Specify whether the work values the business or your ownership interest. If you own less than all of the company, your interest may carry voting rights or transfer restrictions that affect its value, so do not assume it equals your proportional share of the company's value.
- Which standard of value will you use, and why does it fit a decision about selling?
- Will you value the company as a continuing business or on another basis, and why?
- Which records will you examine, and what will you accept from management without checking?
- Will you explain the assumptions that move the range, the limits of the work and who may rely on it?
Ask to see how the range changes if earnings soften or if replacing your own work costs more than expected. If gaps in the records prevent a useful estimate, agree what must be corrected before the work goes further. An early estimate can also show which preparation is worth doing before a sale, so ask the preparer to separate current evidence from improvements you hope to make. If performance or market conditions change materially before you act, have the estimate revisited.
What moves value in a founder-led company?
Carlos carried a principle from his banking years into our advisory work: a company's valuation is tied to the repeatability of its revenue generation. For a founder-led company, the test is whether customers keep buying when someone other than the founder manages the relationship. His shorter version is the line we work from: "Your valuation scales only when your absence doesn't threaten the business."
A preparer will also ask which earnings are sustainable and which adjustments have evidence behind them. An expense you describe as personal or one-off still needs a record that supports the description. Ask the preparer how the estimate treats your own pay and the work someone would have to take on after you leave, and check that the adjustment fits the earnings measure used. Reliance on a few large customers and the depth of the management team affect how much of the earnings a buyer would count on. Our exit-readiness guide covers the operating evidence in detail.
Who should see your private valuation?
Keep the decision estimate within the small group helping you decide, subject to any obligation your attorney identifies. Do not hand it to a buyer or mention its range in an early conversation. Our guide to responding to an unsolicited offer sets out what to share on a first call and what to hold back.
If you later run a sale, decide with your advisers what evidence to share and whether sharing any valuation serves a defined purpose. Before the report or its underlying records leave your hands, have your attorney check your confidentiality obligations and the engagement's limits on disclosure. Whether a reader may rely on the valuation is a separate question, and the engagement terms answer it.
Two situations change the picture. If another owner shares the decision, the order of conversations matters, and the co-owners guide covers it. If one owner is buying out another, your agreements may already set how the interest is valued, and our partner buyout guide covers who produces that figure.
How does a buyer read a seller's valuation?
Carlos acquires businesses in Miami with Carolina Duran, an interest we disclose. From the buyer's side, a seller's figure shows where the seller is starting. What moves a buyer is the evidence behind the earnings and whether the company keeps performing after the founder steps back. Can the adjustments be traced to records? Who holds the customer relationships today, and who will hold them after closing?
A report can help a buyer examine that evidence, and it does not settle value between you. When a buyer's view differs from yours, ask your advisers whether the difference comes from assumptions about the business, the interest being bought or the proposed terms. Knowing which one helps you judge an offer on its terms.
When is a formal valuation required?
Some uses call for a valuation prepared to a particular standard, among them a tax or estate matter, a gift of shares, a buy-sell agreement, a dispute, a divorce and a lender's requirement. The requirements that apply and the intended use guide the standard of value and the scope. Ask your attorney and tax adviser to confirm the requirements, and have the valuation professional explain the proposed work before you commission it. A report prepared for an estate matter may be unsuitable for deciding whether to sell, and an estimate prepared for your decision may be unsuitable for any of those uses.
What should you ask your attorney and tax adviser?
- Does anything in my situation, such as estate planning, a gift of shares, a buy-sell agreement, a dispute or a lender, require a particular kind of valuation?
- Which purpose and standard of value should govern that work, and who confirms the scope before I commission it?
- How would different ways of structuring a sale affect what I keep after debt and tax?
- What restricts sharing the estimate, and what should I understand about deferred or conditional payments?
What should you do next?
- Write down what you want a sale to make possible. Include the work you would want to keep doing and what keeping the company would ask of you.
- Gather the records. Assemble current financial statements and the support for every adjustment you would make to earnings.
- Commission a private estimate. Agree the purpose, scope and permitted use in writing with an independent preparer.
- Compare the two paths. Ask your advisers to set possible personal proceeds beside continued ownership, allowing for the uncertainty of deferred payments.
- Get a private estimate of value before you commit to a sale process or state a price to a buyer.
- Match the kind of valuation to its purpose, and ask how the preparer is paid.
- A valuation estimates value under assumptions, and buyers agree prices on specific terms.
- Compare your possible personal proceeds with keeping the company, after debt, tax and costs.
- Keep the decision estimate private, and route required valuations through your attorney and tax adviser.
The Leadership Scorecard takes ten minutes and shows which parts of the company still depend on you, the dependence a valuation has to account for.