Trigger: a partner is exiting
A partner wants out and someone has to put a number on the business
This one is rarely just financial. There is usually a relationship, sometimes a lawyer, and always a number that decides who walks away with what. Getting it wrong is expensive in a way that does not reverse.
What is needed
What the number has to survive
A buyout number gets argued with. It has to hold up against the other side's accountant, and it has to be a price the business can actually afford to pay.
What the business actually earns
Owner compensation, one-time items, and personal expenses adjusted out, each one documented.
A defensible valuation range
Built from earnings, assets, and comparable transaction logic, with assumptions written down so they can be defended rather than asserted.
Whether the business survives it
A number the company cannot fund is not a deal. It is a slow failure with a signature on it.
Cash, note, or earnout
What each option does to cash flow and debt covenants, modeled before terms are agreed.
Straight answers
Questions owners ask at this point
How do you value a small business for a partner buyout?
Normalize earnings first, then apply valuation approaches appropriate to the business and cross-check them. The output is a defensible range with stated assumptions, not a single number, because a range is what survives negotiation.
Is this a certified business appraisal?
No, and that distinction matters. This is decision-grade analysis to negotiate and structure with. If a court, the IRS, or a contested legal proceeding requires a certified valuation, that needs a credentialed appraiser, and you will be told that plainly rather than sold something that does not fit.
Can the business afford the buyout?
That is the question owners skip and regret. The model shows what the payout does to cash flow, debt capacity, and covenants under a base case and a downside case, before terms are agreed.
What if the partners disagree on the number?
Common, and usually the point. A range with documented assumptions moves the argument from opinion to inputs, which is a conversation that can actually be resolved.
There is a deadline on this
Get the number right the first time.
One call, 30 minutes, no cost. Tell me the deadline and what the other side has asked for, and you will get a straight answer on what it takes.