What is your
business worth?

By Jonathan Kleiman, Barrister & Solicitor · Published June 2026

"What's my business worth?" is one of the most common questions I hear, and it almost never comes up in a vacuum. Someone is thinking about selling, a partner wants out, a marriage is ending, or two shareholders are at war. The number matters because something real hangs on it — a sale price, a buyout cheque, a court order — and getting it wrong in either direction is expensive.

I want to be clear up front about my role. I am a business lawyer, not an accountant or a valuator. Putting a defensible dollar figure on a company is the work of a Chartered Business Valuator (CBV), and throughout this guide I will keep pointing you back to one. What I can do — and what this article is about — is explain why valuation matters legally, the situations where it comes up, the methods at a high level, what actually drives the number, and why the way your business gets valued belongs in your shareholders' or partnership agreement long before anyone is fighting about it.

None of this is a do-it-yourself valuation, and none of it is a substitute for professional advice on your specific company. Think of it as the map a lawyer draws so you understand the terrain — and so you know when, and why, to bring in the right expert. After years of structuring sales, buyouts, and disputes in Ontario, these are the things I want every owner to understand before the number ever gets put on the table.

When valuation actually matters

The first thing I do is ask why you need a value, because the purpose changes the answer. The same business can be worth different amounts depending on the context, and the "right" number for a friendly sale is not necessarily the right number for a contested buyout. Here are the situations where it comes up most.

Selling or buying a business. This is the most common one. A seller wants to know what they can realistically ask; a buyer wants to know what they should pay and how to structure the deal. Whether you are on the sell side or the buy side, the value drives everything that follows — the price, the financing, the earn-out, and the allocation. I walk buyers through the whole process in the buying a business checklist for Ontario, and sellers should be thinking about value well before they list.

A partner or shareholder buyout. Co-owners rarely stay aligned forever. One wants to retire, one wants to cash out, one wants to bring in capital the other resists. When one owner buys out another, you need a value for the shares — and if there is no agreed method, this is exactly where deals stall and relationships break.

A court-ordered buyout in an oppression case. When a minority shareholder is treated unfairly, the courts have a powerful remedy: a judge can order the company or the other shareholders to buy out the aggrieved owner at a "fair value" the court determines. I cover that remedy in depth in shareholder disputes and the oppression remedy in Ontario. In that context, valuation stops being a negotiation and becomes evidence a judge weighs.

A divorce or family-law matter. If a spouse owns a business, its value feeds into the division of family property. Family-law valuations have their own rules and their own valuation date, and they are a frequent battleground — which is another reason a credentialed, independent valuation matters.

Other disputes. Estates, partnership dissolutions, insurance claims, and a range of other situations can all turn on what a business is worth. The common thread is that the number has real consequences, so a casual estimate will not do.

The point worth holding onto: value is not a single fixed fact about your business. It depends on the purpose, the context, and sometimes the legal standard being applied. That is why the first conversation is always about why you are asking.

Can the same business really be worth different amounts?

Yes, and it confuses people, so it is worth saying plainly. A business sold on the open market to a strategic buyer who can fold it into their own operations may be worth more than the same business valued for a buyout between two existing co-owners. A family-law valuation uses its own date and its own rules. A court fixing fair value in an oppression case may refuse discounts a private buyer would demand. The underlying company is identical; the number moves because the purpose and the standard move with it. That is not a trick — it is exactly why naming the purpose is the first thing a good valuator and a good lawyer do.

The three main approaches to value

At a high level, business valuation comes down to three main approaches. A good valuator does not pick one and ignore the rest — they usually run more than one and use the others as a cross-check. Here is what each one is doing, in plain terms.

1. The asset-based approach

This is the most intuitive: take the net value of the business's assets and subtract its liabilities. What you are left with is, roughly, what the business is worth if you valued it on its balance sheet. The asset-based approach is most useful as a floor — a minimum the business should be worth — and it is the natural fit for asset-heavy businesses (think equipment, real estate, inventory) or for a business that is being wound down rather than sold as a going concern. Its weakness is that for a profitable operating business it almost always understates value, because it ignores the earning power and goodwill that make the business more than the sum of its parts.

2. The income or earnings-based approach

This is the most common approach for a healthy, profitable operating business, and it is the one most owners are really asking about. The idea is simple to state: take the business's normalized earnings — often EBITDA, or "seller's discretionary earnings" for a small owner-operated business — and apply a multiple to them. The multiple is where the judgment lives. It reflects the industry, the size of the business, its risk, and its growth prospects: a stable, growing, low-risk business commands a higher multiple than a volatile one in a shrinking market.

I deliberately do not quote fixed multiples in this guide, and I would be skeptical of anyone who throws a single number at you for "businesses like yours." Multiples vary widely by industry and by the specific circumstances of the business, and the wrong multiple applied to the wrong earnings figure produces a confident-looking number that is simply incorrect. This is precisely the work a Chartered Business Valuator does properly.

The reason this approach dominates for operating businesses is that it captures what a buyer is actually buying — future earnings. A purchaser is not really paying for last year's equipment; they are paying for the stream of profit the business is expected to keep producing. The two halves of the calculation matter equally: get the earnings figure wrong (by skipping normalization) and the answer is off no matter how good the multiple; get the multiple wrong (by ignoring real risk and growth) and the answer is off no matter how clean the earnings. Both halves are judgment calls backed by analysis, which is why two casual estimates can land so far apart while two professional valuations usually land much closer.

3. The market or comparable approach

The third approach asks: what did similar businesses actually sell for? Just as you might value a house by looking at recent sales of comparable homes nearby, you can sanity-check a business value against real transactions for comparable businesses. The challenge is finding truly comparable sales — small private businesses do not publish their prices, and no two are identical — so this approach is often used to support or check the others rather than stand entirely on its own.

In practice, these three are not rivals. A competent valuation triangulates: it might establish a floor with the asset approach, build the core number on normalized earnings, and test it against comparable market data. When you see only a single method, with no cross-check, that is a reason for caution.

Normalization and goodwill, explained plainly

Two concepts come up in almost every valuation, and they trip people up, so let me explain them the way I do for clients.

Normalization means adjusting the financial statements to show the business's true earning power, stripped of items that are specific to the current owner or that will not recur. The classic example is salary: many owners pay themselves an above-market salary (or run personal expenses through the company) for tax and lifestyle reasons. Those are real to the owner, but they distort what the business would actually earn for a buyer. So the valuator "adds back" the excess to reveal the genuine profit. The same goes for one-time items — a lawsuit, a flood, a one-off windfall — which get removed so they do not skew the picture. Without normalization, an earnings-based valuation is built on the wrong number, and everything that follows is wrong with it.

Goodwill is the value of the business above its tangible assets — the part you cannot put your hand on. It is reputation, customer relationships, brand, a trained team, repeat business, and the systems that make the company run. Goodwill is usually the reason a profitable business is worth far more than its equipment and inventory. But not all goodwill is equal: goodwill that is tied to the owner personally — the customers who only deal with you — is fragile, because it can walk out the door when you do. Goodwill that lives in the business itself — the brand, the systems, the team — is durable, and a buyer will pay much more for it. That distinction is one of the most important ideas in this whole article.

What actually drives value up or down

Owners often want to know what they can do to make the business worth more. This is the most practical part of the conversation, and the good news is that several of the biggest levers are within your control. Here is what raises value — and what drags it down.

• Recurring, predictable revenue. Buyers pay more for income they can count on. Contracts, subscriptions, retainers, and repeat customers are worth far more than one-off project revenue that has to be won again every month.
• Profitability and healthy margins. Consistent, solid margins signal a business that actually makes money, not just one that is busy. Thin or erratic margins drag the number down.
• A diversified customer base. If one client makes up a large share of your revenue, that is customer concentration, and it is a serious value killer — lose that client and the business cracks. A broad, diversified base is much safer and worth more.
• A business that runs without the owner. This is the one I push hardest. The more the business depends on you personally — your relationships, your knowledge, your daily presence — the less a buyer will pay, because they are not buying a company, they are buying a job that ends when you leave. Reducing owner-dependence is often the single most powerful thing an owner can do to lift value.
• Clean books and records. Organized, accurate, professionally prepared financials and a complete corporate minute book make a business easy to value and easy to buy. Messy records create doubt, and doubt always lowers the price.
• Growth. A track record of growth — and a credible runway for more — earns a higher multiple. Flat or declining performance earns a lower one.

The opposites of each of these drag value down: lumpy revenue, thin margins, a single dominant customer, an owner who is the business, messy books, and stalled growth. In my experience, an owner who spends a couple of years before a sale fixing even two or three of these — usually reducing owner-dependence and cleaning up the books — can change the number meaningfully. I cover that runway in exit planning for Ontario business owners.

A concrete example I see often: two competing businesses in the same trade, with similar revenue and similar profit. One is built entirely around the founder — they hold every key relationship, quote every job, and nothing happens without them. The other has a manager running operations, a documented process, and a diversified roster of clients. To a buyer, those are not equally valuable, even though the financial statements look alike. The second business sells for materially more, because the buyer can step in without the whole thing falling apart. The difference is not luck — it is the result of the owner deliberately building a company that does not need them. That is the work that pays off at sale, and it takes time, which is why I tell owners to think about value years before they plan to exit, not weeks.

Is there anything I can do quickly to raise the value?

Honestly, the biggest levers take time — you cannot manufacture two years of recurring revenue in a month. But two things move faster than people expect. The first is cleaning up the books and the corporate records so a buyer's due diligence is smooth rather than alarming; sloppy records create doubt, and doubt always discounts the price. The second is documenting how the business runs — processes, key relationships, supplier terms — so that the knowledge lives in the company and not only in your head. Neither is glamorous, and neither shows up on a single financial statement, but both reduce the buyer's perceived risk, and lower risk is exactly what raises the number.

Why the valuation method belongs in your agreement

Here is the single most important legal point in this article, and it is the one owners most often skip. If you have co-owners, the way the business will be valued on a buyout, an exit, or a death should be written into your shareholders' agreement — or, if you operate as a partnership, your partnership agreement — long before anyone needs it.

The reason is simple. When two owners agree on a method while they are still aligned and friendly, a future buyout becomes a process: you apply the agreed formula or appoint the agreed valuator, and you arrive at a number. When there is no agreed method, the same buyout becomes a fight — each side hires their own valuator, the numbers come back far apart, and the dispute is suddenly about price rather than about parting ways. I have watched valuation disputes derail buyouts that everyone actually wanted to happen.

A good valuation clause does not have to fix a single number — it can name an approach, require an independent Chartered Business Valuator, set out how that valuator is chosen, and specify the valuation date and any discounts. What matters is that the mechanism is agreed in advance, so the only thing left to do later is run it. I treat this as core drafting, not boilerplate, and it is one of the most valuable clauses in the whole agreement.

What happens if there's no agreed method?

You fall back on negotiation, and if that fails, on the courts. That means competing valuations, legal fees, and months of delay — all to answer a question you could have settled with a clause. When clients tell me a shareholders' agreement is an unnecessary expense, the valuation mechanism is the example I reach for: the cost of drafting it is trivial next to the cost of litigating its absence.

When a court decides "fair value"

Sometimes valuation is not negotiated at all — it is decided by a judge. The clearest example is the oppression remedy. When a shareholder has been treated in a way that is oppressive, unfairly prejudicial, or unfairly disregards their interests, a court has broad power to fix it, including ordering a buyout of the aggrieved shareholder's shares at a value the court determines to be fair.

In that setting, valuation becomes evidence. Each side typically retains a Chartered Business Valuator, those experts produce reports, and the judge weighs them to arrive at a fair value. "Fair value" in this legal sense is a specific concept, and a court may decline to apply certain discounts — for example, a minority discount — that a private buyer might otherwise insist on, precisely because the shareholder is being forced out rather than choosing to sell. The details turn on the facts, which is exactly why credentialed, independent valuation evidence is essential. I go through how these claims unfold in shareholder disputes and the oppression remedy.

The lesson cuts both ways. If you are a minority owner being squeezed, the law gives you a real remedy and a path to a fair value. If you are the majority, an unfair freeze-out can land you in court with a judge setting the price — usually a worse outcome than a sensible buyout would have been. Either way, the value at the centre of it should come from a professional, not a guess.

It is worth understanding how much cheaper the agreed-method route is than the courtroom route. When a valuation method is written into the agreement, the parties run it and move on — one valuator, one process, weeks rather than years. When it is left to litigation, each side funds its own expert, the experts disagree (often by a wide margin, because each is retained by a side with an interest in the outcome), and a judge has to sort it out after a hearing. The legal and expert costs of that exercise can consume a meaningful slice of the very value being fought over. I have rarely seen a contested valuation fight where both sides did not later wish they had settled the method in advance.

Why you want a Chartered Business Valuator, not a rule of thumb

You will find rules of thumb everywhere — "x times revenue for your industry," a broker's confident estimate, a number a friend got for their shop. These are fine for an idle gut check over coffee. They are not good enough for a real transaction or a dispute, and relying on one is a mistake I see often.

A Chartered Business Valuator is a credentialed professional whose entire job is producing defensible valuations — numbers that hold up to a buyer's scrutiny, to the tax authorities, and to a court. They do the unglamorous work that a rule of thumb skips: normalizing the financials, selecting and supporting an appropriate multiple, finding genuine comparables, and documenting it all in a report that can withstand challenge. When real money or a lawsuit is on the line, that defensibility is the whole point.

My role as the lawyer is different and complementary. I do not produce the number — I structure the deal around it, draft the valuation clause that governs how the number gets produced, and handle the dispute if it is contested. The valuator tells you what the business is worth; I make sure the transaction or the fight built on that number actually protects you. The two roles work together, and a serious matter usually needs both.

Common mistakes I see

A handful of errors come up again and again, and each one costs owners real money.

Relying on a rule of thumb for a real deal. An industry multiple off the internet is not a valuation. It ignores normalization, your specific risk profile, and your actual numbers — and a buyer or a court will not accept it.

Confusing revenue with value. A business with big top-line revenue and no profit can be worth far less than a smaller, highly profitable one. Buyers pay for earnings and for durable goodwill, not for how much money flows through the door.

Ignoring owner-dependence. Owners routinely overvalue businesses that cannot run without them. If the customers, the knowledge, and the relationships all live in one person, a buyer discounts heavily — and many owners are genuinely shocked by how much.

Leaving the valuation method out of the agreement. Incorporating with partners and never agreeing how the business will be valued on a buyout is, in my experience, one of the most expensive omissions in private company law. It converts a routine exit into litigation.

Letting the records rot. Messy books and a neglected minute book do not just lower the price — they can derail a sale entirely during due diligence. Whether you take the asset or share purchase route, clean records make the difference between a smooth closing and a deal that falls apart.

Key takeaways

• Value depends on purpose and context. A sale, a partner buyout, an oppression buyout, and a divorce can all produce different numbers for the same business — so the first question is always why you are asking.
• There are three main approaches. Asset-based (a floor), income or earnings-based (a multiple of normalized earnings — the most common for a profitable business), and market or comparable (what similar businesses sold for); a good valuator cross-checks rather than relying on one.
• Normalization and goodwill are central. Normalizing strips out owner-specific and one-time items to show true earning power; goodwill is the value above the tangible assets — and goodwill tied to the owner personally is fragile.
• Put the valuation method in your agreement. Agreeing how the business is valued, in your shareholders' or partnership agreement, turns a future buyout into a process instead of a war.
• Get a Chartered Business Valuator. For a real transaction or a dispute, a CBV produces a defensible number; a rule of thumb or broker's estimate is not enough. The lawyer structures the deal and handles disputes around it.

Frequently asked questions

How do I find out what my business is worth?

You start by being honest about why you are asking — a sale, a partner buyout, and a dispute can all produce different numbers for the same business. From there, a valuation looks at your assets, your normalized earnings, and what comparable businesses have sold for. You can get a rough sense yourself, but for a real transaction or a fight over price you want a Chartered Business Valuator (CBV) to produce a defensible number. In my experience, an owner's own estimate is almost always either too optimistic or too cautious, and a credible third-party valuation is what actually moves a deal forward.

What are the main business valuation methods?

There are three main approaches. The asset-based approach takes the net value of the assets minus the liabilities — a useful floor, and common for asset-heavy or wind-down businesses. The income or earnings-based approach applies a multiple to the business's normalized earnings and is the most common method for a profitable operating business. The market or comparable approach looks at what similar businesses actually sold for. A good valuator uses more than one as a cross-check rather than relying on a single number, and the right method depends heavily on the type of business and the purpose of the valuation.

What is an EBITDA or earnings multiple?

EBITDA is earnings before interest, taxes, depreciation, and amortization — a way of measuring the underlying profit a business throws off before financing and accounting choices. In an earnings-based valuation, you apply a multiple to those normalized earnings to estimate value. The multiple reflects the industry, the size of the business, its risk, and its growth prospects — a stable, growing business earns a higher multiple than a shaky one. I deliberately avoid quoting fixed multiples, because they vary widely by industry and circumstances, and a number that fits one business badly misleads another.

What is goodwill?

Goodwill is the value of a business above its tangible assets — the part you cannot point to on a shelf. It captures reputation, customer relationships, brand, a trained team, and the systems that make the business run. A profitable, established business is usually worth far more than the sum of its equipment and inventory precisely because of goodwill. The catch is that goodwill tied too tightly to the owner personally is fragile: if the customers follow the owner out the door, much of that goodwill walks out with them, which is why owner-dependence drags value down.

What is "normalizing" the financials?

Normalizing means adjusting the financial statements to show the business's true earning power, stripped of owner-specific and one-time items. A common example is an owner who pays themselves an above-market salary, or runs personal expenses through the company — those get added back to reveal what the business would actually earn for a new owner. One-time costs, like a lawsuit or a major repair, are also removed. Without normalization, an earnings-based valuation is built on the wrong number. This is detailed work, and it is one reason a Chartered Business Valuator earns their fee rather than a back-of-the-envelope estimate.

What makes a business worth more (or less)?

Value goes up with recurring, predictable revenue, healthy and consistent profit margins, a diversified customer base, a business that runs without the owner, clean books and records, and a track record of growth. Value goes down with the opposites: lumpy one-off revenue, thin margins, one customer making up most of the sales, an owner who is the business, messy records, and flat or declining performance. In my experience, the single most undervalued lever an owner controls is reducing how much the business depends on them personally — a buyer pays for a company that keeps running after the founder leaves.

How is a business valued in a shareholder dispute or buyout?

It depends first on whether there is an agreement. A well-drafted shareholders' or partnership agreement sets out the valuation method in advance, so a buyout follows a formula instead of a fight. Without one, the parties either negotiate, hire valuators, or end up in court. In an oppression case, a judge can order one shareholder to buy out another and will determine the "fair value" of the shares, often relying on expert valuation evidence. Either way, a Chartered Business Valuator is usually central — a defensible, independent number is what makes a contested buyout actually resolve.

Should the valuation method go in my shareholders' agreement?

Yes — this is one of the most important and most neglected clauses. If your agreement sets out how the business will be valued on a buyout, an exit, or a death, you replace a potential war over price with a process everyone agreed to while they were still friendly. The clause can name a method, require an independent valuator, or set out how one is chosen. Without it, you fall back on negotiation or litigation, both of which are slower and far more expensive. I treat the valuation mechanism as core drafting, not boilerplate.

Do I need a Chartered Business Valuator (CBV)?

For a real transaction or a dispute, almost always yes. A Chartered Business Valuator is a credentialed professional who prepares valuations that hold up — to a buyer, to the tax authorities, and to a court. A rule of thumb or a broker's estimate is fine for a gut check, but it is not defensible when real money or a lawsuit is on the line. The CBV produces the number; my job as the lawyer is structuring the deal around it, drafting the valuation clause, and handling the dispute if the number is contested. They are complementary roles, not competing ones.

Do I need a lawyer for a business valuation?

The valuation itself is the valuator's and accountant's domain — a lawyer does not produce the number. But the value rarely exists in a vacuum: it sits inside a sale, a buyout, an oppression claim, or a divorce, and that is where a lawyer matters. I draft the valuation clause in your shareholders' agreement, structure the transaction the value feeds into, and litigate or negotiate when the number is in dispute. Think of it as a team: the valuator tells you what it is worth, and the lawyer makes sure the deal or the fight around that number protects you.

Final thoughts

"What's my business worth?" has an honest answer and a comfortable one, and they are not the same. The comfortable answer is a single tidy number off a rule of thumb. The honest answer is that it depends on why you are asking, that it rests on the careful work of normalizing earnings and judging goodwill, and that for anything real you want a Chartered Business Valuator to produce a figure that holds up. The business that values well is the one with predictable revenue, healthy margins, a diversified customer base, clean records, and — above all — the ability to run without you.

The parts you control are also the parts that move the number most: reducing owner-dependence, tidying the books, and, if you have partners, agreeing the valuation method in writing while everyone is still friendly. Whether you are selling a business, buying one, or working through a buyout or dispute, the value sits at the centre of the deal — and structuring the deal around it is where a business lawyer earns their keep.

If you want to talk through a sale, a partner buyout, or a dispute where the number is in play, call 416-554-1639 or book a free consultation. I will give you a straight read on the legal side — and tell you honestly when it is time to bring in a valuator.