Get a defensible valuation
An aspirational valuation kills deals. A defensible valuation — built on normalised EBITDA, the right multiple for your sector and size, and triangulated against DCF — survives buyer scrutiny.
What this step covers
- Normalise EBITDA: add back owner expenses, one-offs, related-party costs.
- Apply a defensible multiple by sector, size, growth, and concentration.
- Produce a valuation range — low, base, high — with the assumptions stated.
The detail
Why aspirational valuations kill deals
Sellers anchor to media headlines ("my friend's business sold for 8x") or to what they need to retire on. Buyers anchor to comparable transactions and DCF. The gap between the two — when set too wide — burns 3–6 months of process and credibility before a deal is finally repriced (or dies).
How we build a defensible valuation
- Normalise EBITDA — add back owner expenses, one-offs, related-party items.
- Benchmark multiples — sector, size, growth, customer concentration, geography.
- Triangulate with DCF — 5-year forecast at a realistic discount rate.
- Asset floor check — net asset value as the absolute minimum.
- Express as a range — low / base / high — with assumptions stated.
| Sector | Typical EBITDA multiple range |
|---|---|
| FMCG distribution | 3.5 – 5.5x |
| Healthcare (clinics, pharmacies) | 5 – 8x |
| Education (schools, training) | 4 – 7x |
| Logistics / transport | 3 – 5x |
| Tech / SaaS | 1.5 – 5x revenue (not EBITDA) |
| Hospitality (hotel, restaurant) | 3 – 5x |
| Professional services | 2.5 – 4x (heavy owner discount) |
Ranges are illustrative. Actual transaction multiples in 2024–2025 are heavily influenced by concentration risk, growth, and balance-sheet structure.
Frequently asked
Why is my business worth less than I thought?+
Most owners value the effort they've invested. Buyers value the future cash flows they can extract — minus risk. The gap is normal; the discipline is to close it with evidence, not negotiation.
Do I need a formal valuation from a registered valuer?+
Useful but not always required. A defensible advisor valuation is enough for most SME transactions; a registered valuer is needed for property and certain regulated industries.
The information in this guide is provided for general guidance only and is subject to change. Fees, timelines, and regulatory requirements in Kenya are updated regularly. Before acting, please confirm details with the relevant authority (KRA, eCitizen, BRS, county government, or other regulator) or speak with a qualified MyBiashara advisor. MyBiashara is not liable for decisions made solely on the basis of this content.
