Take Inventory of Your Company With a Regular Valuation

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 768 words

Owners who check their company's value once a year know whether it is really growing, spot problems while they are still small and are ready if a buyer calls or life forces a sale. Most owners never do it. They learn what the company is worth only when a partner leaves, a bank asks or a sale is already under way, which is the worst possible time to find out. A current value also helps with personal planning, because retirement, estate and insurance decisions all depend on a realistic idea of what the company is worth.

Think of it as an annual physical for the business: short, routine and far cheaper than discovering a problem late.

Why an annual checkup is worth the effort

For many owners the company is their largest asset, larger than their home or retirement accounts, yet they could not say within a reasonable range what it would sell for. An annual valuation answers a simple question, whether the value is going up and why, and makes the answer comparable from year to year.

The comparison is where the insight lies. Revenue rising while value stays flat usually means margins or risk are moving the wrong way: one customer growing too large, the owner carrying more of the load, or costs rising faster than prices. Seeing that early gives you years, not months, to respond.

What a useful yearly review covers

• Adjusted earnings. EBITDA (earnings before interest, taxes, depreciation and amortization) recast to remove one-time and owner-specific items.
• The likely multiple. Where the company sits in the range buyers pay, most often three to seven times adjusted EBITDA for companies with $3 million to $100 million in revenue, and why.
• Risk factors. Customer concentration, owner dependence, contract terms, key staff, and any legal or tax issues.
• Debt and working capital. What would remain for you after debt is repaid and a normal level of working capital is left in the company.
• Change since last year. Which factors moved the value up or down, and what to work on next.

Be ready for the unplanned

Life does not wait for a good year. A partner wants out, a divorce requires a value, a health problem makes stepping back urgent, or a bank changes the terms of a loan. A current valuation shortens every one of those conversations and makes them less contentious, because the starting point is already agreed. Lenders and insurers respond better to an owner who can show a current value, too; key-person and buy-sell insurance, for instance, are usually sized against what the company is worth.

Opportunity arrives unannounced, too. When a buyer calls with an unsolicited offer, an owner who knows the company's value can judge the offer in days instead of guessing, and can respond from strength rather than surprise. How to evaluate an unsolicited offer covers the next steps.

Free range or formal valuation?

Not every checkup needs a formal report. A free opinion of value, a low-to-high range based on three years of financials, is enough to track direction and plan improvements. A formal third-party valuation, with the methods and evidence written out, is worth paying for when others must rely on the number: partners, lenders, courts, heirs or tax and estate advisors.

Whichever you choose, keep the inputs consistent from year to year, so the change you see reflects the company and not a change in method. Your CPA and attorney can tell you when a formal report is required.

Turn each review into action

A valuation that sits in a drawer is wasted. After each review, pick the two or three factors that held the value back and turn them into projects for the coming year: moving a key customer relationship to a sales manager, putting recurring work on written agreements, reconciling the books with the tax returns or documenting how jobs are priced. Next year's review shows whether they worked.

Over several years the reviews become a record of their own. When you do decide to sell, a series of annual valuations shows buyers a company that has been measured and improved on purpose, which supports both the price and their confidence in the numbers.

How MDR & Associates helps you keep track

Our business valuation service provides formal third-party valuations as a separate, optional service with its own price. For owners thinking about a sale, the discovery meeting and opinion of value are free and confidential. If the review shows work to do, pre-exit consulting covers the 12 to 24 months before a sale. The quickest way to begin is the free valuation snapshot.

Where this fitsSelling a distribution company in Texas →

Questions owners ask next

How much can my company's value change in a year?

It depends on earnings and risk. A change in adjusted EBITDA moves value directly, and changes in customer concentration, management depth or recurring revenue can move the multiple as well. That is why tracking the drivers each year matters more than any single figure.

Will getting a valuation signal that I want to sell?

No. A valuation is confidential, and many owners get one with no plan to sell. Keep it between you, your advisor and your CPA. It is simply a measure of your largest asset, the same way you would review an investment portfolio.