Small business valuation · the data
How many owners actually know what their business is worth?
For most owners the business is the largest thing they own, and the one asset whose value they could not state today. Here is what the sourced data shows.
~80%
of the average owner's net worth is tied up in the business, a single illiquid asset most have never formally priced.
Exit Planning Institute, 2023
Where the average owner's net worth sits
~80% in the business
~20%
The bulk of the wealth is concentrated, illiquid, and invisible day to day.
What owners know, and plan
~60%
have had a formal valuation in the last two years. The rest are steering their largest asset without a current number. (EPI, 2023)
75%
want to exit within ten years, and 49% within five, yet readiness lags far behind intent. (EPI, 2023)
~33%
have no long-term plan for the business or are unsure, rising to 40% among owners with no employees. (Gallup, 2024)
2 to 4x
of SDE, the owner's discretionary earnings, is our typical valuation range, averaging near 2.6x. (Honest Assessment)
Wanting to sell is not selling
Only about 1 in 5 businesses brought to market actually sells
A business that will not sell at the owner's number is not a retirement plan, it is a job the owner cannot leave. (Snider, Walking to Destiny)
The exit funnel
~250,000
owners set out to exit
→
~14,000
sell at the value they wanted
The owners who make it through are the ones who knew their number early and built a business that runs without them. (Exit Planning Institute)