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Research shows that roughly 75% of privately held companies are initially undervalued. This undervaluing stems from a lot of different sources, so business owners should ensure that the team they work with to sell their company has specific experience in their specific sector selling companies with similar Enterprise Values.
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Choose the Leading M&A Firm for Your Enterprise Valuation

To truly understand the value of a tech company, it should be reviewed by an M&A Firm with experience in the particular sector within which the company operates. This experience will include the prior valuation and exits of similar companies in that sector. Importantly, this experience can help lift a company’s Enterprise Value due to a more finely tuned awareness of what the market is willing to bear for such companies. It’s similar to a pro athlete using an agent to help achieve the best deal possible on the market – if one uses the wrong agent – one could be leaving millions on the table. The same goes for the sale of a business. After spending years building a business from scratch, the last thing you want to do is choose the wrong advisor to sell those valuable assets.

Our operational background as owners and M&A Advisors of Technology, Digital and Internet companies, along with the difficult-to-achieve level of experience our team has selling thousands of these businesses through the years, gives us the ability to find the full value proposition of a business and ensure that not one penny is left on the table. Since our advisors have all been in your shoes before, we understand how important the valuation piece is to the entire M&A process.

How Is the Business Valuation Created?

As part of the exit strategy development process, we work with you to create an enterprise value range (EVR) for your business. The EVR will take into account 300+ valuation factors that we use to hone in on the market value of your particular Tech business, taking growth, scale and market economics into account.

The EVR will show an aggressive to a moderately-aggressive approach. We call this a “range” because a business never has a specific defined value – it will be valued differently by different kinds of buyers, but usually, those values will fall within the EVR we identify for you.

Once we have an EVR, we will work with you on a go-to-market strategy that includes a listing price within the range. If you would like to be more or less aggressive than what we have identified as a market value for the business, then we will support you in that process and go to market accordingly.

Business valuation

Business Valuation Process

There are many different methods we use to value a business in the Tech and Internet space. While the most common is a multiple of earnings (past and/or future), many others take into account various attributes of the company, like recurring revenue, contractual longevity, customer churn, domain value, visitors, sector status, etc. Business valuations can be complex in this sector, so it’s important to work with an experienced M&A advisor that can help you navigate the process. ValleyBiggs is a leader in the sale of Tech and Internet companies – we can ensure the right valuation methodologies are used to ensure the highest strike price possible is achieved at closing.

Step 1
Our valuation process starts with a deep understanding of your operations, team and business model. We then run a thorough review of your financial statements and projections, working with your accounting team to ensure the financials are market-ready and properly deliver the company’s earnings profile. It is important during this process that we have a full and complete understanding of the nuances of the company’s operations. While we only operate in the Tech and Internet space and have likely sold companies very similar to yours in the past, every company is different, and a company’s nuances, while seemingly small, can be a big factor in not only building demand in the offering but also showing the competitive differences in the business. All of this can impact valuation.
Step 2
From there, we use the thousands of comparable private companies sold in our database in combination with the hundreds of factors used to value your unique business model to create an Enterprise Value Range for the assets being sold. An important part of this step of the process is to better understand the deal structure that would most excite you as a business owner, especially if there are many shareholders/members involved. For instance, for most Tech companies, buyers will often desire to have the founder(s) stay on for a period of time to ensure continuity of operations since the operational know-how is highly embedded in the founders. In our experience, those founders that are willing to continue after closing are more likely to receive more demand and higher valuations for their company (since the risk profile is lessened with the agreement to continue after closing). Additionally, we want to know whether the owners are willing to retain a portion of equity. This can be a big opportunity for a founder because you can get a “second bite at the apple” by selling an initial portion of the business and retaining a portion to be sold later once the company has grown to new heights. On average, when equity is retained, we see roughly 70% sold initially with 30% retained, although we’ve seen hundreds of variations in between. Having flexibility in retaining equity can also help improve the overall valuation of the company, which is why this is thoroughly discussed during this stage of the process.
Step 3
Once we present the Enterprise Value Range, the decision with how aggressive we are at market is always with our clients – our job is to tell you where the market stands with respect to similar companies in your vertical, but we would never attempt to step into your shoes to dictate the strike price of your business. That is your decision alone, and we will be there to support your decision, regardless of what you decide.

When Should You Get a Business Valuation?

It’s never too early to come to us so that we can put together a valuation and determine an Enterprise Value Range for a business. Once a value is determined, the business owner can then begin working with us to create an exit strategy and develop a timeline for going to market. Since ValleyBiggs is 100% performance-based, an owner can take advantage of both the valuation and exit creation strategy processes all at no cost to them, so it never hurts to start early, take your time and get it right. We are happy to help and would never consider charging for this work – we are that confident in our abilities.

And importantly, if we determine that now isn’t the right time to sell, you can take the time between when we peg the valuation to when we go to market to prepare the business and its operations for the sale process.

Turn to ValleyBiggs for an in-depth analysis of your business so you can know your company’s actual value. Our deal intermediaries work tirelessly to maximize our clients’ valuations and resulting deal multiples.


When Is It Time To Sell Your Business?

One key indicator is the value the market currently sees in your business, which we can help peg, but another is what stage of growth your company is in. Selling a majority share of a business and rolling 20-40% of equity with a buyer can be the perfect solution to solve concerns that the timing might not be right to fully realize your goals in an exit. By taking it in phases and selling 60-80% on the first sale and 20-40% down the road with a partner, you can take chips off the table, work with a partner to help you scale faster, and potentially achieve a far better exit during the second sale.

At ValleyBiggs, we do more than just a business valuation. We serve as your coach, mentor and advisor to help you build value over time so you can make a move when the time is right. We help you build an exit strategy that includes various deal structures that might better fit within your timeline – like selling a part of a business and rolling equity. With decades of experience and thousands of closed deals under our belts, ValleyBiggs is the solution for building the right structure of a deal on your timeline.


Who Should Do Your Business Valuation?

To know your company’s true value, you need to work with a team that understands the inner workings and daily operations of your business, has thousands of tombstones in their portfolio, and only focuses on companies in your vertical and deal size. Additionally, if that same firm has a massive buyer pool and the skills to properly seek out qualified buyers within a vertical, then you’ve got the makings of a fantastic partner in the selling process. ValleyBiggs is that partner, and we are unaware of any other firms in the sector that can represent clients as efficiently, with as much hands-on experience, and with as many tombstones as we have. If you own a lower- or mid-market business in the Tech space, trust ValleyBiggs to uncover every possible value proposition so that you get maximum value when we close your business.

How Much is Your Business Worth?

Have questions about our business valuation services? Want to find out what your $5m+ Technology, Internet, eCommerce or Digital business is truly worth? Get in touch today to see how we can help.