Learning & Information Center

Plain-language guides to how private companies are valued. Written for the person doing the work, not for a search engine — though we will not pretend we mind being found. Everything here is free and requires no account.

Written by the person who built the software

Every guide here comes out of engagement work, not a content calendar. If a method is fragile in practice, the guide says so — which is also why the app shows you the range of indications instead of one confident number.

Questions about a method? team@exitsight.com reaches a person.

Start here

How to value a small business: the whole process

From gathering statements to signing a conclusion, in the order the work actually happens.

Guide · 18 min read

Financial statement recasting explained

Which add-backs are legitimate, which get challenged, and how to document each one.

Guide · 11 min read

Choosing a valuation method

A decision path from company size, earnings stability, and buyer type to the right methods.

Guide · 9 min read

Building a discount rate you can defend

Risk-free rate, equity and size premia, and company-specific risk, component by component.

Guide · 12 min read

Fair market value vs. investment value

Why the same company is worth different amounts to different buyers, and why the standard must be stated.

Guide · 7 min read

Discounts for lack of control and marketability

What the empirical studies actually support, and how discounts get attacked in review.

Guide · 10 min read

What buyers pay for: the seven value drivers

Customer concentration, owner dependence, recurring revenue, and the rest — ranked by effect on price.

Guide · 14 min read

Preparing a business for sale, three years out

The changes that move the multiple, and how long each one takes to show up in the numbers.

Guide · 13 min read

By industry

Industry-specific guides with real transaction multiples, size tables, and worked examples:how to value a business, by industry — from HVAC contractors to dental practices to trucking companies.

Valuation glossary

Discretionary earnings (SDE)	Pre-tax profit plus one working owner’s compensation, interest, depreciation, amortization, and non-operating or personal expenses. The earnings base most small-business buyers price on.
Capitalization rate	The discount rate less the sustainable long-term growth rate. Dividing one year of stabilized earnings by it converts earnings to value.
Fair market value	The price at which property would change hands between a willing buyer and a willing seller, both informed and neither compelled to act.
Premise of value	Whether the company is valued as a going concern or in liquidation. Stating it is not optional; the same assets are worth different amounts under each.
Terminal value	The value of all cash flows beyond the explicit forecast period, usually by capitalizing the final year at a long-run growth rate.
DLOM	Discount for lack of marketability — the reduction reflecting that no ready market exists for a private company interest.
DLOC	Discount for lack of control — the reduction reflecting a minority holder’s inability to direct distributions, compensation, or a sale.
Excess earnings	Earnings above a fair return on net tangible assets, attributed to intangible value and capitalized separately as goodwill.
Price justification	A test of whether the business’s cash flow can cover debt service at the proposed price and still pay the owner a market wage.
Normalizing adjustment	A change to reported figures to reflect what a hypothetical buyer would experience: market rent, market salary, removal of one-time items.

Industry multiples, current cycle

Ranges observed in reported small-company transactions. Use them as a sanity check on your own comparables, never as a substitute for them.

Industry	Price / SDE	Price / revenue
Machine shops and precision fabrication	3.1–4.2×	0.45–0.68×
HVAC and plumbing contractors	2.8–4.0×	0.40–0.62×
Full-service restaurants	1.6–2.4×	0.28–0.42×
Managed IT services	3.6–5.4×	0.85–1.45×
Dental and medical practices	2.4–3.6×	0.60–0.85×
Distribution and wholesale	2.9–3.8×	0.32–0.55×
Landscaping and grounds maintenance	2.2–3.2×	0.45–0.72×
Insurance agencies (P&C book)	4.2–6.0×	1.60–2.40×
Trucking and last-mile logistics	2.6–3.5×	0.38–0.58×
Childcare and early education	2.5–3.4×	0.55–0.80×

Industry

Price / SDE

Price / revenue

Machine shops and precision fabrication

3.1–4.2×

0.45–0.68×

HVAC and plumbing contractors

2.8–4.0×

0.40–0.62×

Full-service restaurants

1.6–2.4×

0.28–0.42×

Managed IT services

3.6–5.4×

0.85–1.45×

Dental and medical practices

2.4–3.6×

0.60–0.85×

Distribution and wholesale

2.9–3.8×

0.32–0.55×

Landscaping and grounds maintenance

2.2–3.2×

0.45–0.72×

Insurance agencies (P&C book)

4.2–6.0×

1.60–2.40×

Trucking and last-mile logistics

2.6–3.5×

0.38–0.58×

Childcare and early education

2.5–3.4×

0.55–0.80×

Compiled from reported transaction databases, trailing twelve months. Ranges are interquartile, not extremes.