Business Valuation: Complete Step-by-Step Assessment Process

This is how I work with my clients to value their businesses. A rigorous, multi-methodology process that produces defensible valuation ranges for any purpose.

By Ali Sedighi•10 min read•Updated June 2025

Visual Process Overview

1
Data
2
Financial
3
Market
4
Discounted
5
Risk
6
Final

Phases 3 and 4 run in parallel, feeding into the risk assessment phase.

Step 1: Data Collection & Review

Duration: Week 1

I gather all relevant financial and operational data: tax returns, financial statements, revenue breakdowns, customer concentration data, asset registers, and any existing valuations or appraisals. I also collect industry data for benchmarking.

Deliverables

  • Data request checklist
  • Document collection
  • Preliminary data review

Step 2: Financial Normalization

Duration: Weeks 1-2

I normalize the financial statements to reflect the true economic performance of the business. This means adjusting for owner discretionary expenses, non-recurring items, below-market compensation, and other factors that distort reported earnings. Normalized earnings are the foundation of every reliable valuation.

Deliverables

  • Normalized income statements
  • Adjustment schedule
  • Normalized EBITDA calculation

Step 3: Market Comparable Analysis

Duration: Weeks 2-3

I research and analyze multiples from comparable business sales, public company trading multiples, and industry merger and acquisition data. I adjust the multiples for differences in size, growth rate, profitability, and risk profile to arrive at appropriate valuation multiples for your specific business.

Deliverables

  • Comparable transactions analysis
  • Multiples summary
  • Valuation range by methodology

Step 4: Discounted Cash Flow Analysis

Duration: Weeks 2-3 (overlapping)

I build a detailed DCF model that projects future cash flows based on your business's historical performance, growth prospects, and capital requirements. This captures the intrinsic value of the business based on its ability to generate future returns.

Deliverables

  • DCF valuation model
  • Cash flow projections
  • Sensitivity analysis

Step 5: Risk Assessment & Adjustments

Duration: Week 3

I evaluate the risk factors that affect value: customer concentration, supplier dependence, competitive threats, regulatory exposure, technology obsolescence, and management team reliance. Each risk factor is quantified and reflected in the valuation range.

Deliverables

  • Risk factor assessment
  • Valuation adjustment calculations
  • Scenario matrix

Step 6: Final Report & Recommendations

Duration: Week 4

I deliver a comprehensive valuation report that presents the concluded value range, the supporting analysis from all methodologies, the key assumptions, and the risk factors. I also provide actionable recommendations for increasing business value over time.

Deliverables

  • Formal valuation report
  • Value driver recommendations
  • Executive summary

Why This Process Works

A business valuation is only as good as the methodology behind it. Many valuations rely on a single approach — usually a simple multiple of earnings — which can be wildly inaccurate for businesses with unusual characteristics. My process uses three independent methodologies (market comparables, DCF, and asset-based), then reconciles them into a defensible range.

The financial normalization step is where most valuations go wrong. Owner-discretionary expenses, one-time costs, and non-market compensation can distort earnings by 30% or more. I adjust for these factors rigorously so the valuation reflects the true economic value of the business.

Related Services

Know What Your Business Is Worth

Whether for sale preparation, strategic planning, or investor reporting, get a professional valuation you can rely on. Free initial consultation.

Call (604) 632-4959Email Ali@Sedighi.ca