We’re often asked, “What’s my business worth?”
While we use financial models like DCF and market multiples to run a quantitative valuation, the reality is that qualitative factors often matter just as much—if not more. Buyers don’t just look at the numbers; they pay a premium for businesses with strong competitive advantages that are hard to replicate.
If you’re a business owner thinking about selling, some of these advantages take time to build—but the valuation bump can be worth it.
Even a year or two of preparation can significantly increase your sale price and make your business far more attractive to buyers.
Here are just a few key factors that create a strong competitive moat and drive higher valuations:
Structural & legal advantages
Long-term contracts with customers or suppliers
Government regulations that limit new competition
Licensing requirements that create barriers to entry
Intellectual property, including patents and trade secrets
Financial & cost advantages
Economies of scale that competitors can’t match
Cost structures that create a pricing advantage
Exclusive supplier or vendor agreements
High customer switching costs
Technology and digital presence
Proprietary software or technology that enhances efficiency or customer experience
Strong online presence, including high search engine rankings
Well-known trademarks or brand recognition
Customer & revenue stability
Recurring revenue models that create predictable cash flow
A loyal, repeat customer base
Prime physical location with a secure, long-term lease (for retail businesses)
Industry-specific growth factors
First-mover advantage in a space with network effects
Acquisition-driven industries where buying competitors is the main growth strategy
A business that runs independently
Strong leadership team that can operate independently
Documented processes and systems that don’t rely on any one person
Culture that retains talent beyond the transaction