The Private-Company Pricing Checklist

1 Normalize the earnings

Start from real owner earnings (SDE or adjusted EBITDA), not headline profit. Add back the owner's salary, one-time costs, and personal expenses, but only the add-backs that survive the sale.

Ask: which of these add-backs disappear the day the founder leaves? Those are not add-backs. They are the business.

2 Test revenue quality

Two businesses with identical revenue are not worth the same. Separate recurring from one-time, measure net retention, and look at how revenue was won, durable demand or a few lucky contracts.

Ask: if I subtract everything non-recurring, what is left, and is it growing?

3 Map customer concentration

Concentration is a discount, full stop. One customer at 40% of revenue is a different risk profile than fifty customers at under 5% each, even at the same total.

Ask: what happens to the price if the largest customer leaves in year one?

4 Measure owner dependence

If the relationships, the selling, and the judgment all live with one person, a buyer is purchasing a job, not an asset. The more the business runs without the owner, the higher the multiple.

Ask: could a new owner step in next quarter without revenue walking out the door?

5 Build a defensible comparable set

Comparables are triangulation, not an answer. For every comp, state why it belongs and where it differs. A public multiple borrowed without a discount for size, liquidity, and concentration overstates value.

Ask: for each comp, what is the one reason it is not actually like this business?

6 Identify the buyer type

This is the factor a formula cannot see. A financial buyer prices a standalone return. A strategic buyer prices your business inside theirs, cross-sell, cost removed, capability not built, a competitor denied, and will rationally pay far more.

Ask: who is actually at the table, and what is this worth to them?

7 Produce a range, with sensitivities

Never a single point. Show the range, the assumptions behind each end of it, and what moves the number. A value you cannot defend a range around is a value you do not understand.

Ask: what two assumptions, if wrong, would move this the most?

Before you sign: listen for the silences

Sellers curate. The most valuable diligence starts with one question: given how this company wants to be seen, what would it least want me to look at?

• Customer concentration that is technically disclosed but never highlighted
• A renewal closer and less certain than the narrative implies
• A key person whose quiet departure would reprice the whole thing
• Margins propped up by a one-time event dressed as run-rate
• A growth story that is really one channel that may not repeat