Why Your Business Valuation Is a Range, Not a Number

The Myth of the Perfect Number

"What's my business worth?" is the most common question we hear. And the honest answer is always: it depends.

Not because we're hedging - but because a business has different values to different buyers, under different assumptions, at different times. Any tool that gives you a single number is hiding the uncertainty that every sophisticated buyer already understands.

Why Multiple Methods Exist

Each valuation methodology answers a slightly different question:

• DCF (Discounted Cash Flow): What are the future cash flows worth today, given the risk? This is forward-looking and assumption-heavy.
• Comparable Companies: What are similar public companies trading at? This reflects current market sentiment.
• Precedent Transactions: What have buyers actually paid for similar businesses? This reflects real deal economics, including control premiums.

Each method has blind spots. DCF is sensitive to growth assumptions. Comps may not reflect private company discounts. Precedent deals may be stale or from different market conditions.

How to Read Your Range

A valuation range of $4.2M – $6.8M with a midpoint of $5.3M tells you:

1. The floor ($4.2M): What you'd likely get in a distressed or quick sale
2. The midpoint ($5.3M): The most probable value given current data
3. The ceiling ($6.8M): What you could achieve with competitive bidding and strong negotiation

The width of the range itself is information. A narrow range (±10%) means high confidence - the methods agree. A wide range (±40%) means significant uncertainty - and that's a signal to gather more data or address the assumptions driving divergence.

What Narrows the Range

• More financial history (3+ years of audited statements)
• More comparable data (peers in your exact NAICS code)
• Clearer growth trajectory (documented pipeline or contracts)
• Lower key-person risk (the business runs without the founder)

The Bottom Line

A range is not a weakness - it's intellectual honesty. When you sit across from a buyer or investor, showing that you've thought about your valuation from multiple angles builds credibility. A single number invites challenge. A well-reasoned range invites negotiation.