Alan Mehrez Explains the Business Valuation Process Step by Step

When you ask a business owner how much their company is worth, they usually give you a number that's a bit too high. This is not because they are trying to be dishonest; it is the way people think. You have spent years building your business. It is easy to think it is worth more than it really is.

Alan Mehrez, a business broker at United Realty Group in Florida, has helped many business owners figure out how much their company is worth. He has seen people who want to sell a business and people who want to sell a big company with many ways of making money. Alan Mehrez knows that if you get the value of your business right, you will get buyers and you will be in a good position to negotiate. If you get it wrong, you might scare buyers away because your price is too high, or you might sell your business for less than it's worth.

In this post, we will explain what business valuation means, why it is so important, and how Alan Mehrez helps his clients find a price for their business. Business valuation is important because it helps you find a fair price that you can defend. Alan Mehrez uses a step-by-step process to help his clients find this price. Business valuation is a step when you are selling a business. Business valuation is what helps you find out how much your business is really worth.

What Is Business Valuation, Exactly?

At its core, business valuation is about finding out what a business is really worth now in the open market. This is based on financial performance, the assets that the business has, and sales of similar businesses. It is not about opinion or emotional feelings.

This is different from asking, "How much money have I put into this business?" What would I need to feel good about leaving this business? A valuation looks outside at what similar businesses have sold for, what a buyer can expect to make from the business in the future, and what real assets are being given in the sale.

An accurate valuation helps everyone involved. For sellers, it stops them from setting a price so high that the business stays on the market for a long time without any real offers. For buyers, it gives them confidence that they are paying a price based on real numbers, not on a guess.

How Is a Business Valuation Calculated? 

A valuation isn't just a formality before listing a business; it shapes the entire outcome of the sale.

• Overpricing scares off serious buyers. Experienced buyers and their advisors can usually spot an inflated asking price quickly. Instead of negotiating, they simply move on to the next listing.

• Underpricing leaves money on the table. Owners who skip a proper valuation, or base their price purely on gut feeling, often sell for less than their business could have realistically earned them.

• It shapes negotiations later. A well-supported valuation gives you leverage. If a buyer tries to negotiate the price down, having clear data to back up your number makes it much harder to argue against.

The Business Valuation Process, Step by Step

Here's how the process typically unfolds when Alan Mehrez works with a client on valuing their business.

Step 1: Gathering financial records. Profit and loss statements, tax returns, and cash flow records, usually covering the last three to five years, form the foundation of the valuation.

Step 2: Looking at assets, liabilities, and inventory. A complete view of what the business owns and what the business owes, including equipment, inventory, and any debts that are still outstanding.

Step 3: Studying revenue trends and profitability. Focusing on more than the total revenue number to understand how steady the income is, whether profits are going up or down, and how much of the revenue comes from a small number of customers.

Step 4: Comparing similar businesses and market data. The internal numbers get compared against recent sales of similar businesses in the same industry and region.

Step 5: Applying a valuation method. This is where Alan Mehrez applies one or more valuation methods to turn all of this information into an actual number (more on these methods below).

Step 6: Finalizing a fair market value range. Of one specific number, the process usually ends up with a realistic range. This range gives space for talking about price while still being based on the information that was gathered.

Business Valuation at a Glance

Without a Professional Valuation	With a Professional Valuation
Asking price based on assumptions	Pricing supported by financial data
Greater risk of overpricing or underpricing	More realistic market value
Difficult negotiations	Stronger negotiating position
Lower buyer confidence	Increased credibility with buyers
Unclear expectations	Better decision-making throughout the sale

Pro Tip

Don't wait till you understand the value of your business

Reviewing is the best strategy that needs to be followed. Even if selling is still a future goal, knowing your current value provides a useful benchmark for long-term planning.

Mistakes Business Owners Make During Valuation

Some of the most common valuation mistakes Alan Mehrez sees are the following:

• Relying on emotional attachment—Pricing a business based on "what I put into it" emotionally or financially, rather than on what the market will actually support.

• Not having clean financial records—Missing or disorganized financials make it harder to build a strong valuation and can raise doubts for potential buyers.

• Ignoring market comparables—Setting a price without ever looking at what similar businesses have actually sold for in the current market.

Avoiding these mistakes early on can save months of a business sitting on the market with no real offers.

Conclusion

Business valuation isn't just a number on a page; it's the foundation that everything else in a sale is built on. Getting it right from the start means fewer surprises during negotiations, more serious buyer interest, and ultimately, a deal that reflects what your business is truly worth.

If you're considering selling your business and want a valuation grounded in real data rather than guesswork, reaching out to Alan Mehrez at United Realty Group is a solid first step toward understanding exactly what your business could sell for in today's market.

FAQs

Q1. How long does a business valuation typically take?
Depending on the complexity of the business and how organized the financial records are, a valuation can take anywhere from a couple of weeks to a month or so to complete thoroughly.

Q2. Do I need a valuation even if I'm not ready to sell yet?
Yes, many owners get a valuation done well before they plan to sell, simply to understand where they stand and identify what changes could increase the business's value over time.