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Whether you're planning a sale, drafting a buy-sell agreement, gifting shares, or preparing for litigation, getting a business valuation is a critical step in the process. But what many business owners don’t realize is this:
How you prepare for the valuation can significantly impact the outcome.
At Strong Tower Valuations, we help business owners across industries approach the valuation process with clarity, confidence, and the right documentation. Below are seven steps every owner should take to get the most out of their business valuation—whether it’s for SBA lending, succession planning, or internal decision-making.
1. Get Clear on the Purpose of the Valuation
Not all valuations are created for the same reason—and the purpose of your valuation will affect both the method used and the scope of the report.
Are you:
- Selling your business?
- Settling a legal dispute or divorce?
- Gifting shares for estate planning?
- Applying for an SBA loan?
- Conducting internal planning or partner buyouts?
Each of these use cases has different requirements. For example, valuations used for IRS compliance or SBA financing must meet strict guidelines, while informal consultations can be more flexible.
Before you begin, define the purpose clearly.
Ready to discuss your valuation needs?
Request a Consultation
2. Organize 3–5 Years of Financial Statements
Accurate, well-organized financials are the foundation of any quality valuation. This typically includes:
- Profit and loss statements (P&Ls)
- Balance sheets
- Statement of cash flows (if available)
- Tax returns (business and sometimes personal if the business is a pass-through entity)
The cleaner your books, the more reliable and efficient the valuation process will be. If your financials are messy, now is the time to work with your accountant or bookkeeper to clean things up.
3. Understand and Document Owner Add-Backs
Owner add-backs are discretionary expenses or non-recurring items that should be adjusted to reflect the true earning power of your business.
Common examples include:
- Owner salary above market
- Personal vehicles, insurance, or travel run through the business
- One-time legal fees or consulting costs
- PPP loans or other temporary subsidies
Failing to properly identify these can understate your earnings—and therefore your valuation. We help clients document and support these adjustments to ensure an accurate picture.
Not sure what qualifies as an add-back?
Request a Consultation
4. List All Business Assets and Liabilities
In addition to cash flow, the value of your equipment, real estate, inventory, and other hard assets can play a role—especially in asset-heavy businesses like construction, landscaping, or manufacturing.
Create a list that includes:
- Vehicles and equipment with estimated market value
- Inventory and supplies on hand
- Real estate owned or leased
- Outstanding loans and liabilities
For asset-based businesses or transactions, this information can significantly impact value.
5. Gather Key Operational and Legal Documents
Beyond financials, appraisers will want to understand the full operational and legal landscape of your business. This may include:
- Lease agreements
- Customer contracts
- Partnership agreements
- Employee headcounts and roles
- Organization chart
- Intellectual property or licensing documentation
Being prepared with this information signals transparency and helps build a strong, defensible valuation report.
6. Review Industry Conditions and Competitive Positioning
Valuation isn’t just about your financials—it’s also about where your business stands in the broader market.
You should be prepared to answer:
- Who are your top competitors?
- What market trends are affecting your industry?
- Do you have pricing power or recurring revenue streams?
- What differentiates your business from others?
We incorporate both internal performance and external market conditions when determining fair market value. Your insights here are invaluable to the process.
7. Set Realistic Expectations and Be Open to Discovery
Valuation is not about validating a number you already have in mind—it’s about uncovering a well-supported conclusion of value based on data, analysis, and professional judgment.
It’s natural to have a number in your head, but the more open you are to the process, the more valuable it will be.
Our goal at Strong Tower Valuations is to deliver a report that is:
- Defensible and detailed
- Free from bias or outside pressure
- Trusted by banks, attorneys, and stakeholders alike
Have questions about how to prepare for your specific situation?
Request a Consultation
Preparing the Right Way Saves Time, Money, and Stress
A business valuation shouldn’t feel like a black box. With the right preparation, it becomes a powerful tool for decision-making, planning, and negotiation. Whether you’re in the early stages of exploring options or actively navigating a deal, Strong Tower Valuations is here to guide you through the process with transparency and expertise.
Let’s Talk
If you're considering a business valuation—or just want to know if now is the right time—reach out to our team. We serve clients across industries, from closely held family businesses to professional service firms, and tailor each engagement to the purpose and people behind it.
Let’s make sure you’re prepared—and positioned—for what’s next.
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