Business valuation is both art and science. A small misstepcan reduce your company’s perceived value by hundreds of thousands of dollars. Here are the most common mistakes—and how to avoid them.
## Mistake 1: Overestimating Add-Backs
Owners often inflate add-backs (owner salary, personal expenses). Buyers scrutinize every adjustment. Unsupported claims reduce credibility.
## Mistake 2: Ignoring Market Comparables
Your business doesn’t exist in a vacuum. Buyers benchmark against similar sales in your industry. Pricing too high compared to peers will scare off serious offers.
## Mistake 3: Neglecting Documentation
Claims about revenue or growth must be supported with contracts, invoices, or bank statements. Missing documentation kills trust.
## Mistake 4: Poor Timing
Selling during a downturn—or when financials are weak—reduces valuation. Strong, consistent performance drives higher multiples.
## Mistake 5: Owner Dependency
If the owner is the business, valuation suffers. Buyers want transferable systems, not a personality-driven operation.
### Example
A contractor approached PAC Consulting expecting a 5x multiple. After reviewing, we adjusted to a realistic 3.5x due to lack of documentation. With packaging and process improvements, we later positioned him at 4x, securing a solid deal.
PAC Consulting provides accurate, market-based valuations nationwide. We’ll help you avoid mistakes and maximize your business worth.