11
September
2025

What is the Value of Your Business?

Unlock the secrets to accurately valuing your small business with essential insights on key valuation methods and their financial significance.

What is the Value of Your Business?

In the first quarter of 2025, more than 2,300 small businesses were sold. The median sale price was roughly $349,000, up 4% from the same time last year.1

As a business owner, ascertaining the value of your business is important for a variety of reasons, including business succession, estate tax estimates, or qualifying for a loan.

There are a number of valuation techniques, ranging from the simple to the very complex. Outlined below are three different approaches to valuing a business.

  1. Asset Based: Calculates the value of all tangible and intangible assets held by the business. This approach ignores the future earning potential of the company. Thus, a pure assetbased valuation model is often used for companies that are bankrupt or looking to liquidate.
  2. Earnings Based: Seeks to arrive at a business’ value by applying a multiple to normalized earnings, i.e., earnings adjusted to subtract owner’s compensation and related expenses. The multiplier can vary substantially, depending upon the industry and the outlook for the business.
  3. Market Based: Compares the business to recent sales of similar companies.

Business valuation is not just a formulaic exercise. For instance, there is a value to the business of being a “going concern” as opposed to the start-up alternative. Ownership percentage will also matter; purchasing a minority share that has limited control may result in a discount to the actual value. The prospects for the business can impact its value. A greater premium will likely apply to a company engaged in a leading-edge technology than it would to one involved in a mature market.

Valuing a small business is not an exact science. Some aspects of the valuation may be debatable (e.g., the remaining life expectancy of a machine), while other aspects may be positively subjective (e.g., the value of the company’s reputation).

Willing Seller & Buyer
The true value of anything can only be determined when a willing seller and a willing buyer agree on a price of exchange. As a consequence, any valuation exercise may yield only a rough estimate.

Before moving forward with a business valuation, consider working with legal and tax professionals who are familiar with the process. Also, a qualified business appraiser may be able to offer some valuable insight.

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Categories: Dealer News Stories

Matt Justice

Matt Justice

Matt Justice has been providing financial advice to his clients since 1995 when he began his career in the financial services industry. He graduated from Vanderbilt University with a Bachelors Degree in Human and Organizational Development. While attending Vanderbilt under a full athletic scholarship in football, he also made the Dean’s List. Matt continues his career related education to stay abreast of the current economic environment. Matt utilizes his studies in income taxation from the American College in Bryn Mawr, Pennsylvania, to assist his clients in creating tax-efficient strategies.

Matt joined Peachtree Planning in 1997 and became a Vice President in 2008. He is a Registered Representative with Park Avenue Securities LLC (PAS). He advises his clients on a variety of financial matters including retirement planning, investment planning and risk management. Matt focuses on helping to optimize the profitability of his client’s financial resources, while concentrating on helping to maximize net worth and help protect against risks that adversely affect his client’s financial well-being. He develops strategies for individuals, families and businesses to reach financial confidence as efficiently and effectively as possible.

Matt specializes in the automobile industry where he is the Director of the Georgia Division of the Auto Dealer Services Group and an active member of the NAIDA and the GAIDA. Matt also consults independent auto dealers across the country. Matt is a member of NAIFA, National Association of Insurance and Financial Advisors and a Life and Qualifying Member of the Million Dollar Round Table. He is a member of the National Commodore Club and the Gridiron Club for Vanderbilt University. Matt and his wife Regina are members of the Southside Church in Newnan where they live. Matt and Regina have 3 adult children Noah, Anna, and Emily.

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David Gibson

David Gibson

People choose to work with David because they trust him. He takes the time to find out what is important to his clients and their personal goals for their money. David’s approach to working with his clients is help them make educated decisions that feel right to them.

David’s clients include both individuals and small business owners. He advises his clients on a variety of matters including maximizing and protecting wealth and retirement planning.

David has a diverse experience that includes his planning practice and senior positions as a corporate executive. David has an engineering degree from Georgia Tech and has a MBA from Washington University in St. Louis.

David lives in Fayetteville with his wife, Melissa, and twin boys, Joseph and Joshua. David is an active member of Evergreen Church and a leader in Boy Scouts.

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