Are You Asking a Reasonable Price for Your Privately Held Company?

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 754 words

Your asking price is reasonable if the earnings support it at a multiple buyers actually pay, a lender would finance it, and qualified buyers respond to it with serious offers. If any of those fails, the price is a wish, and the market will correct it, usually at a cost to you.

Pricing a private company is harder than pricing a public one. There is no share price to check, and most private companies do not have audited statements, so buyers do more digging and apply more caution. The five tests below help you check your number before buyers do it for you.

Test 1: do the earnings support it?

Divide your asking price by your adjusted EBITDA, the earnings before interest, taxes, depreciation and amortization after legitimate owner add-backs. In MDR & Associates' experience, companies with $3 million to $100 million in revenue most often sell for three to seven times adjusted EBITDA. If your price implies a multiple well above that range, you need a clear reason a buyer will accept: exceptional growth, recurring contracts, a strong management team or a strategic fit that a particular buyer will pay for.

Be honest about the add-backs too. Each one has to be documented, or a buyer will reverse it, and your implied multiple jumps. An asking price built on generous add-backs fails this test even when it looks reasonable on paper.

Test 2: can a buyer finance it?

Most buyers borrow part of the price. A lender will take the adjusted earnings, subtract a market salary for whoever runs the business and the yearly payments on the acquisition loan, and look at what remains. If the cushion is thin, the bank will not lend at your price, and many buyers drop out before they ever make an offer.

Understanding how acquisitions are financed is part of setting a price that can close. Sometimes a modest seller note bridges the gap; sometimes the price itself is the problem. A lender's rough view is a quick reality check you can get before going to market.

Test 3: how will buyers read the risks?

Buyers adjust the multiple for risk. Expect them to examine each of these, and ask yourself honestly how yours would look to an outsider:

• Stability and trend of earnings over several years.
• Breadth of the customer base and the share held by the largest accounts.
• Supplier relationships and the distribution network in place.
• Competitive threats, current and emerging.
• Capital spending the business will need soon after closing.
• Product and service diversity.
• Growth potential in the market you serve.

Tests 4 and 5: evidence and market response

Evidence. Can you point to transactions or offers for similar companies that support your number? An advisor who sees current deals, or a formal business valuation, can provide it. A price supported only by what you need from the sale, or what a friend received for a different company, is not evidence.

Market response. Once marketing begins, the market gives its own verdict. Plenty of interest in the blind profile but few offers after buyers see the numbers usually means the price is out of line with the financials. Offers that cluster well below your figure tell you the same thing. The final price commonly lands between the asking price and the seller's floor, though occasionally a sale closes below both. Our article on what you could realistically sell for today shows how advisors frame that range.

Warning signs your price is too high

Any one of these is worth a second look before going to market. Several together mean the price should change, or the company should be improved before it is sold. Better to learn that now than from months of silence.

• You set the price by working backward from what you need to retire.
• The implied multiple is well above what companies like yours have sold for, with no clear reason.
• Your add-backs are large, numerous or poorly documented.
• A lender's rough check says the debt payments would consume most of the earnings.
• Qualified buyers ask for the numbers, then go quiet.

How MDR & Associates checks the price

Before any company goes to market, we give the owner a free, confidential opinion of value based on three years of financials, and we tell you plainly if an expected price is not supportable. If we do not believe we can sell the company for maximum value, we decline the engagement rather than list it at an unrealistic number. Contact us for that conversation.

Where this fitsBusiness valuation in Texas →

Questions owners ask next

What happens if I overprice my company?

Serious buyers look elsewhere, and the ones who stay use the price as a reason to dig harder. The company can sit on the market for months, which raises the risk of a leak and makes buyers wonder what is wrong. Lowering the price later rarely recovers the lost momentum.

Can a price be too low?

Yes. Underpricing leaves money on the table, and an unusually low price can make buyers suspicious. Competition among several qualified buyers protects against it: if the starting number is conservative, bidding pushes it up. That is a strong reason not to negotiate with only one buyer.