What were you thinking?

Before the email, call or visit a prospective buyer will have taken a view on ballpark valuations from the data a firm allows the public to see. That's LinkedIn, sure, website, ofcourse, but also Companies House (CRO) (sorry but they largely ignore gongs, awards and directories). The serious ones prioritise CRO data, roll it back over decades and know relative market positions and comparators. Then they know how flexible to be on their starting positions (usually x4-5 for smaller cashflows), but they'll make the approach anyway.

Owner managers are always living in the future, sitting on the current years as done and dusted (ie beyond further change) while next year and 2 years out the rewards are clearly coming.
The drivers for EV are obvious, quantum (bigger cashflows get bigger multiples), focus (some business lines are worth more than others; dilution of core ones hurts), future cash visibility (subscription/SaaS business model proportions), proven growth (good renewals as well as client acquisition costs managed scalably), client character (size, region, industry, etc) as well as issues such as old-school vs technologically enabled, tender driven, etc. Then the perennial deflators of key client reliance, key sales or consultant reliance, owner/founder reliance, and pricing come into play. There are always the oddities of pension funding, rental/property ownership, owner benefits and 'related companies/IP' to consider too. But the point is:
A founder's EV number is usually way ahead of a prospector's through simply not managing the released data well enough. Prospectors take a -18 month view of a cashflow; founders are 3 years out.
I remember a wiley old CFO's jaw-dropping at an EV less than a 1/3rd of his dreams, when in fact, a patient run through peeling that onion showed it was a matter of time and presentation, not fundamentals (much). And we hadn't even gotten around to individual buyer tolerances and ranges...

This can kill deals at the get-go. It can also mean 'knock-out' pitches are wildly off target too.
Perhaps more importantly, for teams not selling it also overinflates EMI structures and potentially erodes founder equity or overcompensates for virtual contributions.

During budget times and looking to 2025 and beyond, it's important to get this perspective clear. Don't be the German Coast Guard. A few free lunches simply won't do it, however. It's what a good non-exec should help you with. Ask us about the Ballpark EV service we offer.