[Crawl-Date: 2026-04-06] [Source: DataJelly Visibility Layer] [URL: https://travisbusinessadvisors.com/zh/articles/business-valuation-range-austin-which-one-right] --- title: 3 Different Valuations: Which One Is Right? description: Three valuations, three different numbers. Here's why Austin business owners get conflicting values — and which one actually matters when you sell. url: https://travisbusinessadvisors.com/zh/articles/business-valuation-range-austin-which-one-right canonical: https://travisbusinessadvisors.com/articles/business-valuation-range-austin-which-one-right og_title: Travis Business Advisors og_description: Austin's Business Broker for Owners Who Built Something Worth Protecting og_image: https://storage.googleapis.com/gpt-engineer-file-uploads/attachments/og-images/598e6334-eb7e-4cdb-9bad-6a67b74e851b?Expires=1775422155&GoogleAccessId=go-api-on-aws%40gpt-engineer-390607.iam.gserviceaccount.com&Signature=XohJTtkAmsM6NTTTILYOicAWnVPn9C8RCQ9k%2Fn%2FmpCDFMbVeOM4XRpiB1SRlZzisI9hGBq67t7Elh5tKl6vxybSkR94jwptDGkvJFfPhm%2BxbX49eiEdX%2Bmy3Wo2t%2FRJOWybZmdE%2FM9d5a6QbvmWeDseCoNuvsP0ejJcjifGN62GUFqZQWv9oznuhXu0eE0WmDX4BRZi79sE0HYSJ1reAf9eTOueKDWPPjMIr%2FSO%2BcHEebakd679a0byTQHfqUxiWqMCP9cOu2zJwmbWEoFk%2FkUoOMzfjrtyMDbP%2BeEQMQIl22mwKx5qtqCr7hCojQgZF00diNfrALT5nOcvQDRiksQ%3D%3D twitter_card: summary_large_image twitter_image: https://storage.googleapis.com/gpt-engineer-file-uploads/attachments/og-images/598e6334-eb7e-4cdb-9bad-6a67b74e851b?Expires=1775422155&GoogleAccessId=go-api-on-aws%40gpt-engineer-390607.iam.gserviceaccount.com&Signature=XohJTtkAmsM6NTTTILYOicAWnVPn9C8RCQ9k%2Fn%2FmpCDFMbVeOM4XRpiB1SRlZzisI9hGBq67t7Elh5tKl6vxybSkR94jwptDGkvJFfPhm%2BxbX49eiEdX%2Bmy3Wo2t%2FRJOWybZmdE%2FM9d5a6QbvmWeDseCoNuvsP0ejJcjifGN62GUFqZQWv9oznuhXu0eE0WmDX4BRZi79sE0HYSJ1reAf9eTOueKDWPPjMIr%2FSO%2BcHEebakd679a0byTQHfqUxiWqMCP9cOu2zJwmbWEoFk%2FkUoOMzfjrtyMDbP%2BeEQMQIl22mwKx5qtqCr7hCojQgZF00diNfrALT5nOcvQDRiksQ%3D%3D --- # 3 Different Valuations: Which One Is Right? > Three valuations, three different numbers. Here's why Austin business owners get conflicting values — and which one actually matters when you sell. --- Video Guide Watch: I Got Three Different Valuations — Which One Is Right? 6 min An HVAC company owner in the Austin metro asked three different professionals what the business was worth. The CPA said $1.1 million. An online valuation tool said $1.8 million. A business broker said $1.45 million. Three numbers. A $700,000 range. And the owner walked away from all three conversations more confused than before. This happens constantly. And the confusion isn't because anyone is lying or incompetent. It's because "what is your business worth?" is actually three different questions — and each professional was answering a different one. ## Three Questions That Sound the Same (But Aren't) The word "valuation" gets used loosely in business conversations. But in the Austin business valuation market, there are distinct methodologies that produce distinct numbers — and understanding which number applies to your situation is the difference between pricing your business correctly and pricing it into oblivion. **Question 1: "What would a buyer pay for this business in the open market?"** This is Fair Market Value (FMV) — the price a willing buyer and willing seller would agree to, with both parties having reasonable knowledge of the relevant facts and neither being under compulsion to act. This is the number that matters when you're actually selling. FMV is driven by comparable transactions — what similar businesses in similar industries in similar markets have actually sold for. Not what someone thinks they should sell for. Not what an algorithm calculates. What real buyers paid real money for in completed deals. For the HVAC company, FMV might be $1.45 million — based on the company's recast SDE of $520,000 and a market-supported multiple of 2.8x, validated by comparable HVAC transactions in the Austin and Texas markets. **Question 2: "What is this business worth to a specific buyer?"** This is Investment Value — and it's different from Fair Market Value because it accounts for the unique circumstances of a particular buyer. A private equity firm rolling up HVAC companies in Texas might value that same business at $1.8 million because of synergies, tax benefits, or strategic positioning that aren't available to a typical buyer. Investment Value explains why the online tool generated a higher number — it likely used generalized multiples that reflect the upper end of market activity, including PE-driven transactions. But unless that specific buyer shows up at the negotiating table, Investment Value is theoretical. It's the ceiling, not the floor. **Question 3: "What are the hard assets worth if the business closes tomorrow?"** This is Liquidation Value — the amount you'd receive if the business stopped operating and the assets were sold individually. Trucks, equipment, inventory, real estate (if owned). It's the floor. For the HVAC company, that might be the $1.1 million number — heavily weighted toward the company's fleet, equipment, and any real estate, with minimal value assigned to goodwill, customer relationships, or going-concern earning power. The CPA's valuation likely leaned toward Liquidation Value or a conservative book-value approach — which is what CPAs are trained to use for tax and estate purposes, not for market transactions. (For why CPA valuations often diverge from market reality, see "Your CPA Loves You. But Their Valuation Is Probably Wrong.") ## Why the Range Exists Three different numbers from three different sources isn't a failure of the system. It's the system working as designed — each approach serving a different purpose. The problem isn't that the numbers differ. The problem is that sellers don't know which number to use when. And that confusion leads to two expensive mistakes. **Mistake #1: Pricing too high.** The seller latches onto the highest number — usually the Investment Value or the online estimate — and lists the business at a price that qualified buyers won't pay. The business sits. Months pass. The seller eventually drops the price, but by then the best buyers have moved on, and the market reads the extended listing time as a red flag. Overpricing doesn't just delay the sale. It damages it. **Mistake #2: Pricing too low.** The seller trusts the lowest number — often the CPA's conservative estimate — and accepts an offer that's hundreds of thousands below what the market would have paid. No negotiation. No competitive process. Just relief that someone made an offer, combined with the assumption that the CPA's number was "the real one." Neither mistake is necessary. Both are preventable with the right framework. ## The Methodology That Actually Matters When You Sell When the goal is selling a business in the Austin market, the valuation methodology that matters is market-based — specifically, the income approach adjusted by comparable transaction multiples. Here's what that looks like in practice: **Step 1: Recast the financials.** Start with the business's tax returns and profit-and-loss statements. Identify all legitimate add-backs — owner compensation, personal expenses, one-time costs, depreciation, interest — to arrive at the true Seller's Discretionary Earnings. For businesses above $5 million in value, EBITDA replaces SDE. (For a complete walkthrough of add-backs, see "The $200,000 Mistake: Add-Backs Your Accountant Isn't Telling You About.") **Step 2: Apply market-appropriate multiples.** The multiple isn't pulled from thin air. It's derived from comparable transactions — actual sales of similar businesses in similar industries and geographies. An HVAC company in Austin might trade at 2.5x–3.5x SDE depending on size, growth trajectory, customer concentration, and revenue mix. (For more on how cash flow — not revenue — determines what buyers actually pay, see "Revenue Is Vanity. Cash Flow Is Sanity. Here's What Buyers Actually Pay For.") **Step 3: Adjust for business-specific factors.** Two HVAC companies with identical SDE won't necessarily trade at the same multiple. The one with 60% recurring service revenue commands a premium over the one that's 90% project-based. The one with a documented management team sells at a higher multiple than the one where the owner runs every call. These qualitative adjustments refine the number from a range to a point estimate. **Step 4: Validate against the market.** Does the resulting number make sense given current SBA lending conditions? A buyer purchasing at the calculated price — financing through SBA 7(a) at current rates of 9.75%–14.75% — needs the business's cash flow to cover debt service with a comfortable margin (typically a 1.25x debt service coverage ratio). If the math doesn't work for a buyer, the valuation is academic regardless of the methodology. ## The Role of Each Professional Understanding who does what — and the lens through which they view valuation — eliminates most of the confusion. **The CPA** views valuation through a tax and compliance lens. Their training emphasizes conservatism, defensibility, and adherence to accounting standards. When a CPA values a business, they're often producing a number suitable for estate planning, partnership buyouts, or IRS defense — not for maximizing sale price on the open market. CPAs are essential to the deal team. They're just not the right person to set the asking price. **The online valuation tool** uses algorithms based on industry averages and generalized multiples. These tools are useful for a ballpark — a reality check, a starting point. They're not useful for pricing a specific business because they can't account for the dozens of qualitative factors that move multiples up or down. Think of them as the Zillow estimate of business valuation: directionally interesting, operationally useless. **The business broker or M&A advisor** views valuation through a transaction lens. Their job is to determine what a qualified buyer will actually pay in the current market — considering financing conditions, buyer pool depth, comparable transactions, and business-specific strengths and weaknesses. This is the number that drives listing price, negotiation strategy, and deal outcome. ## What to Do With Conflicting Numbers If you've already received multiple valuations and they don't agree, here's the framework: **Identify which methodology each number represents.** Is it FMV, Investment Value, or Liquidation Value? Was the financial data recast or taken directly from tax returns? Were comparable transactions used, or was it a formula-based calculation? Once you know the methodology, the differences usually make sense. **Default to the market-based approach for sale pricing.** If the goal is to sell the business in the Austin market, the Fair Market Value derived from recast financials and comparable transaction multiples is the number that matters. It's the number buyers will benchmark against. It's the number lenders will underwrite against. It's the number that drives the actual deal. **Use the range constructively.** The lowest number (likely Liquidation Value) tells you your floor — what you'd receive in a worst-case scenario. The highest number (likely Investment Value) tells you your ceiling — what a strategic or PE buyer might pay under optimal conditions. The middle number (FMV) is where most transactions land. Knowing all three gives you negotiating intelligence. **Get a broker's opinion of value.** Most experienced business brokers will provide a written opinion of value based on recast financials and comparable data. This isn't a formal certified appraisal — but for the purpose of setting a listing price and developing a negotiation strategy, it's the most practically useful document in the process. (For the foundational numbers that drive every valuation, see "The Three Numbers Every Austin Business Owner Should Know Before Calling a Broker.") We break down [each valuation methodology in detail](https://travisbusinessadvisors.com/articles/business-valuation-methods-sde-dcf-comps-austin) — SDE multiples, DCF analysis, asset-based approaches, and market comps — so you can understand which one a buyer will use and why. ## The Number That Matters Most At the end of the day, a business is worth what someone will pay for it. Not what a formula says. Not what a spreadsheet calculates. Not what the owner believes it should be worth based on years of sweat equity and sacrificed weekends. The HVAC company owner who got three different valuations? The business ultimately sold for $1.52 million — within 5% of the broker's estimate, above the CPA's number, and below the online tool's number. The buyer was a qualified individual relocating to Austin from Houston, financed through SBA 7(a), with a 90-day transition period. A straightforward deal at a fair price, validated by the market. Three valuations didn't create confusion. They created context. And with the right advisor to interpret that context, the right number emerged — the one a real buyer was willing to write on a real check. ## Structured Data (JSON-LD) ```json {"@context":"https://schema.org","@type":"Article","headline":"I Got Three Different Valuations for My Business. Which One Is Right?","description":"Fair Market Value, Investment Value, Liquidation Value \u2014 they\u0027re all \u0027right\u0027 for different purposes. 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