There are times when I’m brought in to assess the value of a business and the first question I’m asked is: ‘what is this business worth?’
While it’s a reasonable question, in many cases, it is being asked at the wrong time.
A Situation that Stayed With Me
There was a time where I worked on a matter involving an art-related business where they received an unexpected interest from a prospective buyer. At the time, the financial performance was strong and the business was doing well. That is usually how these engagements start.
That was until we worked through the details, and I saw a different picture.
The issue was not the financial performance itself, but rather the nature of it.
By then, the focus shifts from ‘what is this business worth?’ to ‘what would this business be worth to a buyer?’
And that shift stems from understanding what sits behind the numbers.
In this instance, a significant portion of the relationships were tied directly to the the owner. There was limited contracted revenue, and no formal agreements that gave the buyer confidence those relationships would transfer after settlement. The buyer was concerned on whether the business would still function the same way once the owner stepped back.
That question was never satisfactorily resolved and the transaction did not proceed.
What stayed with me was that the outcome was preventable. Not quickly, but gradually. With earlier planning, there would’ve been time to strengthen customer transferability, establishing key relationships, maintain recurring or contracted income, and reduce the dependency on the owner before going to market. The problem was not the business itself, but the timing. Once I was involved, the window for sale had already closed.
Value Factors That I Cannot Overlook
From my experience, there are signals that clarify a buyer's position quickly.
revenue concentrated in the owner's personal relationships
limited or no contracted recurring income
systems and processes that are undocumented or owner-reliant
key staff without retention arrangements in place
These are structural issues. And when they are present, the conversation shifts beyond the financials.
The Impact of Timing on Available Options
When the position of the business is identified early, there are usually options.
key relationships can be formalised and transitioned
contracted or recurring revenue can be established
systems can be documented and made independent of the owner
dependency risks can be reduced before going to market
When the issue is identified at the point of transaction, the position is different. There is limited room to move. The buyer can see the risk clearly. And the owner is negotiating with the business they have, not what they could have prepared.
At that point, the pathway is more defined. Options are reduced, and the outcome is no longer entirely within the owner's control.
How I approach these situations
When I am brought into these engagements, my role is to provide clarity where it is needed.
Not to alarm or overcomplicate, but to understand what the business looks like from a buyer's perspective. I explain it in practical terms and explain what can realistically be done.
When owners engage early, the conversation shifts. Rather than simply determining value, we can start improving the factors behind it. In practice, that usually means reviewing cost structure and EBITDA performance, documenting systems and operational processes, securing contracted or recurring income where possible, and ensuring key staff are appropriately retained.
The goal is to address the concerns a buyer would otherwise raise. None of that happens quickly. Which is why timing matters as much as the work itself. If the work starts early enough, there is usually an opportunity to strengthen the business before value is tested by the market.
That’s how I approach these cases. With a structured analysis and clear communication. The approach is the same.
If you’re supporting a client who may consider a sale, capital raise, or succession event in the next few years, it is often useful to review the underlying value drivers well before a transaction begins.
By having the conversations earlier, there’s more opportunity to strengthen the position.
If this challenge sounds familiar, I can help assess the position and map out the first steps.
Book a confidential discussion here: