tMany entrepreneurs see business valuation mainly as something that comes into play when selling or acquiring a company. But a valuation is more than just a final number. It is a tool that provides insight into the health and growth potential of your business. Especially in the run-up to growth or financing, a valuation is valuable: it shows where the strengths lie, but also where the risks and areas for improvement are.

What do you look at in a valuation?

A valuation goes beyond the numbers alone:

• Future cash flows – investors and financiers are primarily interested in how the company will generate cash in the future.
• Non-financial factors – aspects such as the quality of the management team, the diversification of the customer base, and unique technology or intellectual property greatly influence the attractiveness of the business.
• Scenarios and risks – by modelling multiple scenarios (optimistic, realistic, defensive), you get a clear picture of resilience and growth potential.

Why this is useful for entrepreneurs

An up-to-date valuation helps you to:

• Make better strategic choices – for example: should I raise capital now, strengthen my organisation, or seize an acquisition opportunity?
• Improve your negotiating position – knowing what your company is worth prevents you from selling yourself short in discussions with investors or financiers.
• Look ahead – insight into the drivers of value (cash flow, customers, technology, people) helps you set the right priorities.

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Five insights every entrepreneur can use

1. Timing is crucial
A valuation is both a snapshot and a trend analysis. Don’t wait until you want to sell, but also use a valuation in between – for example every few years – as a checkpoint for your strategy.

2. Invest in your data
The more reliable your figures, the stronger your valuation. Transparent financial and operational data prevent discussion and build confidence with investors.

3. Value is about more than profit
Of course, people look at EBITDA, but factors such as recurring revenue, scalability, customer loyalty and technology often carry more weight in the eyes of investors.

4. Compare smartly
Don’t just benchmark yourself against direct competitors; also look at companies in adjacent sectors. Sometimes that’s where surprising valuation opportunities arise.

5. Preparation pays off
The valuation process forces you to look critically at your organisation. Many entrepreneurs discover improvements this way that add value, even without a sale or financing round.

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Our experience

In our Corporate Finance practice, we often see entrepreneurs being surprised by the insights a valuation brings. Not just by the outcome (“the number”), but especially by the dialogue about assumptions and value drivers. It clarifies what is needed to take the next step in growth – whether that is a funding round, a merger or acquisition, or a transfer within the family.

In short: a valuation is not an end point, but a compass for the future.

Would you like to know what this could mean for your business?
Get in touch with Leo van Schijndel, accredited Register Valuator (NiRV) :
vanschijndel@ecfg.nl | +31 (0)40 295 0313