Meritage Companies | Your Legacy, Maximized.

Two Decades of Helping California Owners Prosper

Meritage Companies™ is a California-based advisory platform purpose-built to serve business owners in the lower middle market. We operate across Northern and Southern California — with offices in Arcadia, Torrance, San Mateo, and Santa Clara — bringing deep local relationships and national-caliber expertise to every engagement.

Our portfolio spans business brokerage, M&A advisory, and exit planning through three trusted platforms: Transworld Business Advisors, Transworld M&A, and Exit Factor™.

We've walked the same path you're on. We know the late nights, the tough decisions, and the joy of seeing your hard work pay off. That experience is why we started this firm — to help California owners navigate their next chapter with confidence.

Price always matters. That's true when you're selling anything — but especially when you're trying to sell a business. A price that's too high can scare away serious buyers, while an undervalued business leaves money on the table. Striking the right balance attracts qualified buyers, and it also helps streamline negotiations for a faster closing process.

There's no one-size-fits-all approach to pricing a business — you can use different valuation methods specific to industries, financial structures, or business models. Understanding these methods helps you as a business owner to determine a fair and competitive asking price.

Understanding Business Valuation

What's the economic worth of a company? That's the ultimate question a business valuation seeks to answer. When you pinpoint the right value, it sets the foundation for a competitive and realistic sale price.

There are real consequences to not understanding your company's value:

↑

Overvaluing a business leads to prolonged sales processes, frustrated buyers, and missed opportunities — your listing goes stale.

↓

Undervaluing a business can lead to significant financial losses — leaving years of earned equity on the table at the moment it matters most.

A well-researched, data-driven valuation ensures that sellers enter the market with confidence, knowing their asking price is both justifiable and competitive.

How Do You Calculate the Value of a Business? Four Common Methods

Determining the right price for your business starts with choosing an appropriate valuation method. Here's a look at the most commonly used approaches:

Asset-Based Valuation

Subtract liabilities from assets. Best suited for asset-heavy businesses like manufacturing or real estate companies where tangible holdings drive value.

Earnings Multiples Approach

A multiple of the company's earnings determines its value. Uses SDE (Seller's Discretionary Earnings) for smaller businesses, and EBITDA for larger ones — providing a clear picture of true profitability.

Market Comparison Approach

Evaluates your company by comparing similar businesses recently sold in the same industry and region. Accounts for market trends, competition, and buyer demand.

Discounted Cash Flow (DCF)

Projects your company's future cash flows and discounts them to present value. Ideal for businesses with stable, predictable earnings and long-term growth potential.

Pro Tip: When wondering how to price a business for sale, it's often best to combine approaches. Using multiple methods cross-validates your valuation and gives you a defensible number when buyers push back at the negotiating table.

Steps to Determine Your Company's Selling Value

Valuing a business may seem complex at first. But following these key steps will ensure your company is positioned for a competitive and profitable sale:

Gather and organize your financials. Compile at least three years of profit and loss statements, balance sheets, and tax returns. Clean, well-organized records build buyer confidence immediately.
Identify and normalize add-backs. Identify owner compensation, personal expenses run through the business, and one-time costs that can be added back to show true earning power.
Research comparable sales. Look at businesses in your industry and region that have recently sold. Your business broker will have access to transaction databases unavailable to the public.
Apply the right valuation method. Based on your business type, size, and financial structure, apply the most appropriate method — or a combination of methods.
Work with a professional advisor. A qualified business broker brings market knowledge, buyer relationships, and negotiation expertise that can meaningfully impact your final sale price.

Why Getting the Price Right Matters More Than You Think

Most business owners only sell once. That means there's no second chance to correct an underpriced deal or recover from a listing that sat on the market for two years because it was overpriced. The price you set on day one signals to buyers whether you're serious, whether you understand your market, and whether the deal is worth their time.

At Meritage Companies, our advisors work with owners to build defensible, market-aligned valuations before a business ever hits the market. The goal isn't just a number — it's the right number, backed by data, positioned for maximum buyer interest, and designed to close.

Ready to find out what your business is worth?

Talk to a Meritage Companies advisor for a confidential, no-obligation business valuation.

Get a Free Valuation