How we value
No black box. No magic multiple.
What a buyer pays is what the business earns for whoever owns it next, times how confident they can be that it keeps earning it. Here's both halves, with a worked example, so nothing about our number surprises you.
The number we multiply.
We start with what the business actually earns for the next owner, not what the tax return says.
Your reported profit — before interest, taxes and depreciation, what buyers call EBITDA — is the starting point. Then we add back what runs through the business that a new owner wouldn't carry: your pay above what a manager would cost, the truck that's really yours, the one-off legal bill. Then we subtract what it would cost to replace you if you leave. Owner add-backs are normal; we go through them with you line by line, and we check them against bank statements before we make an offer, not after.
A worked example
Illustrative. The point is that you can see every step.
| Reported EBITDA | $1,200,000 |
| Owner salary above market | + $150,000 |
| Personal expenses through the business | + $80,000 |
| One-time legal cost | + $40,000 |
| Market salary for a replacement GM | – $180,000 |
| What it earns for the next owner | ~$1,290,000 |
What we won't pay for: projections, a multiple of revenue, or the number someone quoted at a conference. What we will pay for: the earnings we can verify, and the reasons to believe they continue.
What we multiply it by.
The multiple is a measure of confidence. Four things carry more of it than the industry does.
Contracts, routes, renewals, a phone that keeps ringing. Buyers pay for what comes back on its own and discount what has to be won again each year.
One account above a third of revenue changes the picture. Expect part of the price to depend on that account renewing.
A manager, a bench, or systems solid enough that a buyer can find one. The less that runs through you, the less a buyer has to price in.
To bank statements and tax returns. Where deals break now, and the easiest of the four to fix.
None of these has to be perfect. They decide how the deal gets structured — how much is cash at close, whether part of the price waits on something — more than whether there's a deal at all. It's easier to talk about them before an LOI than during diligence, which is why our cursory check asks about them up front.
Run the cursory check →What you'll see from us.
After basic financials and a real conversation, an LOI: price, structure, timing, how it's funded, and what's conditional. The number in it is a number we intend to close on. If diligence turns up something that changes the business, the deal can change and we'll show you exactly why. A slow month or a timing difference isn't that.
Every piece that isn't cash at close — a note, an earn-out, a retained stake, an escrow — says what it is and why it's there. Any two offers can be laid side by side.
Lay two offers side by side →Want the number for your business?
Send a sentence or two about what it does and roughly what it earns. It reaches the person who decides.
Prefer to reach us directly? inquiries@fellwater.com · Call or text (206) 895-7474
What to expect
Then, if it might fit:
- A short call with the person who decides
- A written offer after basic financials, not a range
- A timeline set before you commit, and a call from us if it moves
- No contact with your people or customers without your say-so