The market decides the number

A seller can list a business at any number they like. Whether a buyer pays it is a separate question, and the first thing the buyer’s side asks is where the multiple came from. Every part of a DealGauge valuation is built so that question already has an answer on the page.

Step 1Before any multiple

The read on the financials comes first

Before any multiple is applied, DealGauge reads the client’s financials. It shows what changed in the business, the likely driver behind each change, and the questions worth asking the seller before the valuation is built. It won’t be spot-on for every business, and it doesn’t need to be. It gives you a credible starting point and the question worth chasing, which is the read an experienced practitioner would otherwise do in their head.

  • What changed in the business
  • The likely driver behind each change
  • The questions worth asking the seller
Step 2The method on every plan

The market approach drives the valuation

For owner-operated businesses in the lower and middle market, roughly $1M to $10M in revenue, the market approach is the one that decides the number. So it drives the valuation on every plan, from Starter to Enterprise, and the plans differ on volume while the method stays the same.

Step 3Why the number sits there

Every multiple carries its reasoning

A multiple without a reason is an assertion, and an assertion is the first thing a buyer’s advisor pulls apart. The report shows the observed multiple range for the sector, the sources and the observation period behind that range, and where the selected multiple sits in it. Then it gives the reasoning for that placement, so when someone asks why the number sits there, you point at the page instead of defending it from memory.

  • Observed rangeThe multiple range for the sector
  • SourcesBehind that range
  • Observation periodBehind that range
  • ReasoningFor where the selected multiple sits
Step 4Optional
Enterprise

The DCF, built for the engagement

At this deal size a DCF lives or dies on its assumptions about growth, margins and risk, and no template can set those for a business it has never seen. On Enterprise, the DCF is available as a custom build configured to the engagement.

Step 5Your judgment, your signature

You review it and you sign it

What comes back is the Valuation Report, the Snapshot Valuation Report and the One Pager, plus the editable model. It’s a defensible draft. You review every step, change what your judgment says should change, and sign. The signature block stays empty until you fill it.

  • Valuation Report
  • Snapshot Valuation Report
  • One Pager
  • Editable model
Approximately $1.9 billion in enterprise value across 450+ engagements.
Hensay Qualahfounder

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Questions about the methodology

Which valuation approach does DealGauge use?

The market approach, on every plan, because for the businesses you work on it is the approach that decides the number. The report shows the observed multiple range for the sector, the sources and observation period behind it, and where the selected multiple sits in that range, with the reasoning. On Enterprise, the DCF is available as a custom build configured to the engagement.

Do you offer a DCF?

Yes, on Enterprise, as a custom build configured to the engagement. At this deal size a DCF carries heavy assumptions, so it is built for the engagement rather than run off a template.

How is the multiple selected?

So the multiple holds up when a buyer asks why, the report gives the observed multiple range for the sector, the sources and the observation period behind it, the selected multiple positioned against that range, and the reasoning for where it sits.