Valuation Is Not a Science — And That Matters

Valuation is not a science.
It’s a structured opinion based on assumptions, context, and methodology. It borrows tools from finance, accounting, and economics — but it isn’t governed by universal laws the way true sciences are.

Here’s why:

• Inputs vary. Different valuers use different earnings periods, add-backs, and risk adjustments.
• Methods differ. One may favour EBITDA multiples, another may apply DCF, while a third might focus on recurring revenue.
• Buyers interpret differently. The same business may be worth more to one buyer than another, based on their strategy, synergy potential, or personal appetite.
• Markets shift. What’s “market” today might not be next quarter.

Even global firms like McKinsey, Bain, and Deloitte acknowledge this. Bain outright states that valuation is “an art, not a science,” particularly in private markets (Bain Insights, 2021).

The real power lies not in pretending valuation is exact — but in using it as a tool for positioning and negotiation, not a prediction.

So yes — it’s a well-informed, methodical guess. But it’s still a guess.

Financial vs. Strategic Buyers: Two Different Worlds

Understanding buyer type is fundamental. Not all buyers view your business the same way.

• Financial buyers (e.g., private equity, consolidators) are typically data-driven. They dig into your numbers, assess risk, and model returns. Their goal? Buy low, improve margins, and exit profitably.
• Strategic buyers, however, play a longer game. They’re looking for alignment. If your business unlocks a market, eliminates a competitor, fills a capability gap, or accelerates their growth plans — they may value it well above standard metrics.

A financial buyer values your business based on what it is.
A strategic buyer values it based on what it enables them to become.

This isn’t theory. It’s documented: McKinsey reports that strategic transactions routinely attract premiums of 20%–40% above standalone valuation (McKinsey Quarterly, 2019). That’s because these buyers are pursuing advantage — not just acquisition.

Valuation Is a Snapshot. Sale Price Is a Live Outcome.

Valuation methods rely on assumptions — trailing EBITDA, revenue multiples, DCF models, risk factors. But as Harvard Business Review puts it:

“Valuation is a negotiation disguised as a number.” (HBR, 2020)

You might have one advisor value your business at $2.2M, and another come in at $3.1M — simply due to different assumptions and modelling choices.

That doesn’t mean one is wrong. It means valuation is contextual.

But the actual sale price?
That lives in the real market. It’s influenced by:

• Who’s at the table
• How the opportunity is framed
• The competitive dynamics
• Timing and scarcity
• The story being told — and who’s telling it

Process: The Hidden Engine Behind Price

Here’s the piece most sellers miss.

It’s not just about what you’re selling. It’s how you sell it.

At Growth Focus, we’ve seen time and again that businesses with a well-prepared, well-managed sale process consistently outperform valuation expectations.

According to Deloitte’s M&A Trends Report (2022), transaction preparation and buyer alignment are two of the most critical factors in determining deal success — often more so than financial performance itself.

A strong sale process:

• Builds a tailored list of the right buyers
• Creates tension through structured release of information
• Positions your business in terms of strategic value, not just financial performance
• Maintains control and momentum from first approach to final negotiation

You’re not running a sale.
You’re running a campaign — where the objective is not just to sell, but to position your business as the right next move for the right buyer.

At Growth Focus…

We work with business owners across Australia to help them navigate that critical gap between valuation and sale price. Our process is built around buyer psychology, not just spreadsheets — because we know that who you attract and how you engage them is what ultimately drives results. Using real buyer data, structured negotiation phases, and carefully managed confidentiality, we create environments where the right buyer is not only willing to pay more — they’re motivated to act. That’s the difference between a listing… and a strategy.

The Final Word: Focus on Who, Not Just What

Valuation is helpful. It sets a benchmark.
But buyers don’t pay for spreadsheets.

They pay for outcomes. For momentum. For certainty.
And for businesses that give them something they can’t get anywhere else.

So the better question isn’t:

“What is my business worth?”

It’s:

“Who sees more value in it — and how do I get them to show up and make an offer?”

Because at the end of the day, the result doesn’t just depend on your numbers —
It depends on who’s sitting at the table.

References

• Harvard Business Review, “How to Negotiate the Sale of Your Company Like a Pro,” 2020
• McKinsey & Company, “How to Make a Successful M&A Deal,” 2019
• Bain & Company, “Valuation Is an Art, Not a Science,” 2021
• Deloitte, “M&A Trends Report,” 2022

Harvard Business Review Press, HBR Guide to Buying a Small Business, 2016