Most business owners only think about getting a valuation when they want to sell. But getting a valuation is actually more important for running your business.
As podcast guest and KPMG partner Luke Grima told us: "From an owner’s perspective, knowing what your business is worth helps you make better decisions – particularly around funding. It gives you confidence that you have real equity and the reassurance that if things go wrong, you could sell the business to cover any debt."
So valuation isn't just useful for selling – it's a powerful diagnostic tool for running your business.
Think of it like holding up a mirror, where the market is the reflection. An independent valuation tells you how you're performing relative to the market across sustainable earnings, growth, margin and key business health factors.
From there, you can identify the areas to change in order to enhance your return, reduce your risk and improve your value.
A real-world example: $50M construction company
One construction company we worked with had two significant issues uncovered by our valuation:
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Weak forward pipeline – The business had poor visibility over future revenue and limited forward potential.
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'Key person' concentration risk – Two individuals in senior management held a disproportionate share of both strategic and commercial decision-making, as well as critical technical knowledge.
As a result, we had to mark the valuation down to around 2x earnings. With a stronger, more diversified senior team, that multiple could readily lift to 3–4x earnings – a significant improvement simply from getting the top team right.
Fixing the pipeline problem
To address the weak forward earnings, we focused on building visibility over the sales pipeline through three steps:
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A simple pipeline template – Documenting work in progress, tenders not yet awarded and upcoming prospects over a defined forward period. (You can find these recording templates on our website.)
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Tracking win rates – The business didn't know what percentage of tenders it was winning. Understanding that figure unlocks insight into why you’re winning or losing, and where to improve.
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Regular accountability meetings – Structured reviews of the pipeline, tender performance, upcoming opportunities and actions needed to secure new work.
The result: the business went from minimal forward visibility to two and a half years of confirmed pipeline. However the key isn't doing this once – it's building a systematised, dynamic process for winning work and maintaining a strong forward order book.
Fixing the owner concentration risk
Rather than simply redistributing the owner's decisions across the existing team, we took a more structured approach:
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Brought the senior team together to openly discuss a plan for diversifying leadership and reducing owner dependency.
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Identified capability gaps and specific roles worth developing within the top team – including, where appropriate, offering equity to senior individuals willing to take a stake in the business.
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Went to market to headhunt the right people – selecting for technical skills, cultural fit and communication style.
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Established clear measurements and accountabilities so the owner could trust delegated decisions being made by the team, rather than carrying everything himself.
The outcome was a stronger, more diversified bench – one that would be viewed as genuinely valuable by any potential acquirer.
Why not just focus on earnings directly?
You might ask: why do I need a valuation? Can’t I just focus on improving earnings myself?
Technically, yes – but without a valuation, you won’t get to the source of what’s driving (or undermining) your earnings. A good valuation gives you the specific levers to pull.
Consider this example:
Your sales have grown from $5M to $6M to $7M over three years – a growing business.
But your dividends over the same period were $500K, then $20K, then $250K. That’s enormous volatility. Despite revenue growth, your returns are unstable – which signals that earnings are not truly sustainable.
That’s exactly why business valuation is such a critical diagnostic tool: it tells you not just what your business is worth, but why, and precisely what to do about it.
The above example is a real one, but it’s important to note that each business is different, and it takes time to identify the right remedies and implement changes effectively.
The first step, however, is the same: the ‘mirror test’. Get an independent perspective from an experienced practitioner who understands your industry and your business.
If you are interested in seeking a valuation for your business, contact the team at JPAbusiness for a confidential, obligation-free discussion.
