HeritagePlatform Group
Insights · What is it worth?

The multiple isn’t set by your industry — it’s raised or lowered by specific things you control

By Reetika Gupta and Varun Mahajan

◆ What this piece is: a plain account of what actually moves a buyer’s willingness to pay, from someone who does the paying. What it is not: a benchmark. You will find no numeric multiples here — not one — because a multiple quoted without a business attached is marketing. The one figure that uses percentages is invented and labelled as such. Education, not advice — your accountant, attorney, and family make every real decision with you.
If you read nothing else

Within any industry, the range of what buyers pay is wide, and where you land is moved by eight specific drivers you control — owner-independence, concentration, recurring revenue, clean books, bench, systems, brand, momentum. Most take years to move, which is the argument for scoring yourself now.

The uncomfortable thing first: two businesses in the same industry, the same town, with the same earnings, can be worth very different amounts — and the difference is usually the owner’s own doing. When someone tells you “businesses like yours go for such-and-such,” they are describing the middle of a wide range and letting you assume you sit in the middle of it. You may not. Within any category the honest range runs wide, and where a specific business lands inside it is not set by the industry code on your tax return. It is raised or lowered by a short list of specific, knowable, mostly fixable things.

That is better news than it sounds. It means the number is not weather. Most of what moves it is inside your fence line — but almost none of it can be fixed in the year you decide to do something, which is why this piece exists years before you need it.

Who is talking: Heritage buys businesses to keep them. Our principals and partners have acquired and operate three businesses, and we studied two hundred to buy those three. The list below is what we actually looked at, in the order it actually moved us.

The eight drivers, and why buyers price each one

A buyer is not really paying for your last year’s earnings. They are paying for the confidence that those earnings continue after the person who created them — you — walks out. Every driver on this list is a form of that confidence or its absence. That is why each one moves the price: not sentiment, arithmetic about risk.

THE EIGHT DRIVERS — WHAT RAISES ◦ WHAT LOWERS 1  Owner-independence ▲ Runs ninety days without you ▼ Customers, pricing, and quality all live in your head 2  Customer concentration ▲ No customer you could not afford to lose ▼ One relationship is the business 3  Recurring vs project revenue ▲ Contracts, service plans, repeat orders that arrive on their own ▼ Every January starts at zero 4  Clean books ▲ Three years that reconcile, personal expenses already out ▼ “My accountant can explain that” 5  Documented processes ▲ How the work is done exists on paper, not just in habits ▼ The method retires with the crew 6  Management depth ▲ A second layer that decides, not just executes ▼ Everyone reports to you alone 7  Equipment & facility condition ▲ Maintained on a schedule a stranger can read ▼ Deferred spending the buyer inherits 8  Contract transferability ▲ Customer contracts, leases, and licenses that survive a sale ▼ Key agreements die at closing Every driver is a form of one question: does it continue without you? ◆ heritageplatformgroup.com · Reetika Gupta and Varun Mahajan
FIGURE 1The eight drivers, each with its direction. No numbers on purpose: the size of each effect depends on the business, but the direction never does. A buyer reading your company scores all eight in the first month — usually before telling you.Heritage editorial, from our own diligence practice. Directions, not magnitudes; deliberately no multiples.

Two of the eight deserve a sentence more, because owners undervalue them in opposite directions. Recurring revenue is undervalued because it is boring: the service contract renewing quietly every year never feels like the win a big project feels like, but a buyer reads the two very differently — the project proves you can sell, the renewal proves the business sells itself, and only the second survives your departure untouched. Clean books are undervalued because owners assume they are about accounting, when they are really about trust: the first time a buyer finds a number that does not reconcile, every other number in the room becomes a claim instead of a fact, and claims get discounted. Books do not merely record value. In a sale, they either transmit confidence or leak it.

The reality gap
Today
Your industry’s “going rate” feels like a fact about your business.
The gap
The range inside any industry is wide, and eight controllable drivers decide where in it you land.
What’s possible
You know which two drivers are yours — and since most take years to move, the clock argues for starting now.
The first move
Score yourself on all eight drivers, three states each. The two worst scores are the plan.

One driver, up close: concentration

Take the second driver and slow down, because it is the one owners most often misread as a strength. A big anchor customer feels like success — it was success; you won that account and kept it for fifteen years. But a buyer prices what happens the year after you leave, and a business where one relationship carries most of the revenue is, to a buyer, one phone call away from being a different business. The earnings may be identical to your neighbour’s. The confidence is not, and buyers pay for confidence.

THE SAME EARNINGS, TWO KINDS OF CONFIDENCE ILLUSTRATIVE ONLY — INVENTED FIGURES Concentrated Customer A 55% Customer B 15% Customer C 10% All others 20% One phone call rewrites more than half the business. Spread Largest customer 12% Next four customers 30% Next ten customers 28% All others 30% No single loss changes what the business is. Identical earnings on paper. A buyer does not pay the same for these two companies.
FIGURE 2Concentration, drawn. The percentages are invented to show the shape, not a threshold — there is no magic cutoff. The direction is what matters: every point of spread you build is confidence a buyer no longer has to discount away.Heritage editorial. Invented figures, labelled above. Not a benchmark.

The part nobody says out loud: the clock

Every driver on the list can be improved. Almost none can be improved quickly, and this is the sentence that should change your calendar: most of these take one to three years, which means the work starts before you think you need it — ideally before you have decided anything at all. Clean books need three clean years, and the clock on the first one starts the day you separate the personal expenses. A second layer of management is hired, trusted, allowed to fail, and grown — that is years, not a job posting. Shifting project revenue toward contracts happens one renewal cycle at a time. An owner who starts when the decision is made has, without meaning to, already chosen the lower end of the range.

THE FIX HORIZON — START BEFORE YOU THINK YOU NEED TO ~6 MONTHS 1–2 YEARS 2–3+ YEARS Fixable fast Separate personal expenses Start the add-back file while receipts are easy to find Write the org chart as it really is List which contracts and licenses transfer, and which die Catch up deferred maintenance records Mostly paperwork and honesty. Do these regardless of any plan. A year or two Document how the work is actually done Move key customers onto renewable agreements Build the second clean year of books Fix the worst of the equipment backlog on a written schedule Habits and renewal cycles. Each pass makes the next easier. The long work Owner-independence — the business decides without you Management depth — hired, trusted, allowed to fail, grown Customer spread — won one new relationship at a time Three clean, reconciled years of books, end to end These move the price most — and cannot be rushed at all. The drivers worth the most take the longest. That is the whole argument for starting before you decide.
FIGURE 3The fix horizon. Read it right to left: the long column is where buyers’ confidence really lives, and it is the column you cannot buy back with a busy final year. Starting is not committing to anything — every item raises the business whether you ever sell or not.Heritage editorial. Horizons are typical, not promises; your accountant and your calendar decide.

Why this list is the same as the growth list

Look back over the eight drivers and notice something quietly useful: this is also just the list of what makes a business strong. A company that runs without its owner, spreads its customers, earns revenue that recurs, keeps clean books, and grows its own managers is not merely worth more to a buyer — it is better to own, easier to run, and kinder to the person running it. Nothing on the list is staging. That is why we tell owners to start early without deciding anything: the work pays you either way, and the deciding can wait until the business no longer needs you to hurry.

How the drivers connect to the two earnings figures buyers multiply is covered in SDE vs EBITDA, plainly. How to inspect all eight in your own business, methodically, is the buyer’s checklist you can run on yourself. And the deepest driver of all — getting yourself out of the middle — has its own piece in this library.

The honest con — read this before anything else we say

A buyer telling you how to raise your price is doing something odd, so weigh the interest honestly. Businesses strong on these eight drivers are the only kind we want to buy, and a library that helps owners build them grows the orchard we hope to pick from. Two cautions besides. First, our evidence is small: our principals and partners have acquired and operate three businesses, and we studied two hundred to buy those three — patterns from a couple hundred readings, not a database of decades. Second, not every driver is worth fixing in every business; a seventy-year-old owner with a concentrated customer and a tired facility may be better served by an honest price than by a three-year improvement plan, and anyone who tells you otherwise in every case is selling the plan, not the truth.

Which arm this becomes

Six of the eight drivers are operational — Heritage Intelligence’s territory. Two are demand-side — Heritage Studio’s. The self-assessment underneath is yours, free, either way.

The con, stated by us: The self-assessment produces no number and no valuation, deliberately: a readiness score converted into a price expectation would be us quoting you a multiple with extra steps.

The small move, no email asked: The eight-driver self-assessment — one page, printable, take it to your accountant.

Heritage Advisory, Studio, and Intelligence are paid services; this section tells you which one this subject becomes, and what is wrong with it. Heritage Capital is a principal buyer, never a broker; sellers pay us no fee. All four arms, with each one’s cons.  ·  Heritage Intelligence · Heritage Studio

Find out which drivers are yours

Every business is strong on some of the eight and quietly weak on others, and owners guess their own scorecard wrong more often than not — usually about owner-independence, because it is the hardest one to see from inside. The Read is a structured look at how your business actually runs, driver by driver, with evidence instead of impressions. It is not a valuation and does not lead to one; it tells you where the work is, and how long your version of it will take. If the honest answer is “three years,” better to hear it now than in week five of someone’s diligence.

Education, not advice. Your accountant, attorney, and family make every real decision with you — and any figure you ever see from us comes with its derivation attached.