# Valuation: straight answers for owners · Horizon Answers

Canonical: https://withhorizon.co/answers/valuation

[Answers Hub](/answers)Valuation

Answers Hub · 3 answers

# Valuation

What your business is worth, and why.

In this topic

1.  [01How is a private business valued?](#how-is-my-business-valued)
2.  [02What multiple will my business sell for?](#what-multiple)
3.  [03What are add-backs, and which ones count?](#what-are-add-backs)

01

## How is a private business valued?

Short answer

Most private businesses are valued as adjusted EBITDA times a multiple. The profit a buyer believes will continue is multiplied by a number that reflects risk and growth.

### What to know

-   Start with EBITDA, then add back one-time and owner-specific costs.
-   The multiple rises with recurring revenue, a strong team and low customer concentration.
-   Debt, cash and working capital adjust the final price you receive.

### What to do next

1.  1Pull 3 years of financial statements.
2.  2List every expense a new owner would not have.
3.  3Get an outside view of the multiple for your industry and size.

[Open as its own page →](/answers/valuation/how-is-my-business-valued)[Back to the questions ↑](#top-of-topic)

02

## What multiple will my business sell for?

Short answer

It depends on size, industry, growth and risk. Smaller owner-led service firms often sit lower; larger, recurring, owner-independent firms sit higher.

### What to know

-   Size matters: bigger profit usually earns a higher multiple.
-   Risk lowers it: owner dependence and customer concentration are the biggest drags.
-   Growth and recurring revenue raise it.

### What to do next

1.  1Find your adjusted EBITDA first.
2.  2Score yourself on owner dependence and concentration.
3.  3Compare with recent deals for similar companies.

[Open as its own page →](/answers/valuation/what-multiple)[Back to the questions ↑](#top-of-topic)

03

## What are add-backs, and which ones count?

Short answer

Add-backs are costs added back to profit because a new owner would not have them. Buyers accept the ones you can document and reject the rest.

### What to know

-   Common ones: owner salary above market, personal expenses, one-time legal or moving costs.
-   Every add-back needs a paper trail.
-   Aggressive add-backs erode trust and get cut in diligence.

### What to do next

1.  1List each add-back with the amount and reason.
2.  2Attach support like invoices or payroll records.
3.  3Have your accountant review the list.

[Open as its own page →](/answers/valuation/what-are-add-backs)[Back to the questions ↑](#top-of-topic)

Last reviewed September 2026 by the Horizon team. General information, not legal, tax or financial advice.

Other topics

[Owner dependence](/answers/owner-dependence)[Growing value](/answers/growing-value)[Preparing to sell](/answers/preparing-to-sell)[Deals and offers](/answers/deals)[Tax and wealth](/answers/tax-wealth)[All answers →](/answers)

Want the answer for your business?

The Value Baseline gives you your number and the moves that raise it.

[Book a discovery call](/discovery-call)

New answers, every Thursday.

By subscribing, you agree to get For Owners Only emails from Horizon. Unsubscribe anytime. [Privacy Policy](/privacy-policy)