Why a Broker's Valuation Came in at Half the Accountant's Figure

I valued a corporate supply business at roughly half what the owner's accountant had calculated.
It sells milk, sugar, coffee and groceries to office clients.

Same business.
Same financials.
Wildly different numbers.

The reason wasn't creative accounting.
It was owner dependence.

Why the two numbers were so far apart

The accountant likely applied a multiple to EBITDA and left it there.
EBITDA is profit before interest, tax and certain accounting costs.

That approach misses a basic question.
Who actually runs this business day to day?

In this case, the owners had moved away.
They hired managers to run things.
That arrangement wasn't working.

A buyer stepping in would need to manage the business personally, or pay someone capable to do it.
Either way, that cost has to come out of the profit figure before you can call it a fair valuation.

Multiply EBITDA without accounting for that, and you get a number no buyer will actually pay.

What this means if you're selling

If your business can't run without you for a month, your asking price needs to reflect that.
Not ignore it.

A high number based on raw profit might feel justified.
But if buyers can't make it work once they've priced in a manager's salary, the business sits on the market.

That is worse for you than a realistic number upfront.
Time on the market usually means a weaker negotiating position later, not a stronger one.

Before you get a valuation, ask yourself:

• Is there a capable manager in place?
• Does the current profit already include a fair salary for that role?
• Are your systems and processes written down anywhere?
• Will customers stick around if you're not the one answering the phone?

These answers don't just affect the number.
They affect how many buyers will even consider your business.
And how much room they'll push for on price.

What this means if you're buying

Owner dependence should shape your offer, not just your due diligence checklist.

If a business needs the owner every day to function, you're not just buying a profit stream.
You're buying a job.
Plus the risk and cost of eventually replacing yourself with a manager.

That is a legitimate reason to negotiate the price down from the seller's accountant's figure.

Be honest with yourself about which kind of buyer you are.
Someone who wants to run a business personally?
Or someone who wants a team already in place?

Mismatching those two is how deals fall over after the fact, not before it.

At Business Ready we see this exact gap often.
Sellers are anchored to an accountant's number.
Buyers are unwilling to pay for profit they'll have to replace themselves.

The fix isn't a bigger argument about the multiple.
It's an honest look at who is actually running the business, and what it would cost to replace them.

If you stepped away for a month, would your business still run the same way?