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- Why Revenue-Based Valuations Can Mislead Founders
In this week's issue:
Why revenue-based valuations can mislead founders
75+ questions to ask when selling a business
UBS accelerates U.S. expansion with strategic M&A hires
And a recent story about how business can tear relationships apart
Let’s dive in.
🧠 This Week’s Big Idea
Why Revenue-Based Valuations Can Mislead Founders
Founders often assume that revenue is the best indicator of what their business is worth.
But while revenue can serve as a baseline for valuation — especially in industries like SaaS or services — it rarely gives the full picture.
A few reasons why relying on revenue multiples alone can lead you astray:
Profitability still matters: A $10M business with razor-thin margins won't command the same multiple as a $5M business with strong EBITDA.
Recurring revenue earns a premium: Buyers place much higher value on predictable income streams than they do on one-off projects or inconsistent cash flow.
Context is everything: Industry, buyer type, and growth trajectory all influence how your revenue multiple is calculated.
Buyers will typically use revenue as a starting point, not the finish line.
They'll dig into retention rates, customer concentration, margin profiles, and operational risk long before writing a check.
So before you assume a 3x revenue multiple applies to your business, take a closer look at your fundamentals.
Because strong top-line numbers might get you in the room — but it’s the quality of earnings and structure of your business that determines the final deal.
Curious What Buyers Would Actually Pay for Your Business?
Most founders undervalue what they’ve built or don’t realize which parts of the business turn buyers off.
But with a Certified Pro Valuation, we’ll help you:
Understand what your business is really worth in today’s market
Spot weak points before buyers do
Get a short list of serious buyers who are actively looking in your space
“Exitwise helped us turn an average offer into something life-changing.”
— Shawn McKenna, Founder, DataFuzion
Special offer for readers: Get 10% off your valuation today. Just use the code VALUE10 when booking your call below.
📰 Featured Blog Post
75+ Questions to Ask When Selling a Business
Selling a business is both a thrilling and challenging process… and you only have one chance to get it right.
This blog article breaks down 75+ of the most important questions you should be asking buyers, M&A experts, and yourself before exiting your company.
📰 In The News
UBS Accelerates U.S. Expansion with Strategic M&A Hires
UBS is making big moves to bolster its presence in the U.S. investment banking sector.
The Swiss banking giant recently appointed a seasoned dealmaker from Morgan Stanley as the head of its technology M&A team and America's M&A division.
Other additions include two new Managing Directors, a Global Head of Media, and a new Corporate and Sponsor Advisory Group.
Why it matters to you:
The aggressive talent acquisition shows UBS's commitment to expanding its footprint in the U.S. market, particularly in sectors experiencing rapid growth.
For founders and business owners, this signals an increasingly competitive landscape in the M&A advisory space, with more players trying to represent high-potential companies.
If you're considering an exit or seeking strategic partnerships, now might be the time to engage with experienced advisors who can help position your business effectively in this dynamic market.
Need help? Get in touch with Exitwise.
🗣️ From Brian
I recently had a call with a founder who started a company with his brother.
They'd built something amazing but lost each other in the process. Life and stress got in the way. Boundaries blurred. And pretty soon, it slowly tore their relationship apart.
Sadly, it's a story I hear more often than you might think:
How did you like this week's newsletter? |
That's all for this week. Until next time.
Best,
Brian