Earlier this summer, a client came to Mark Ahern already sure of what their business was worth. ChatGPT had given them the number.
When Mark worked backward, the figure implied something like 24 times earnings. So he tried to recreate the result himself and found the problem. The model appeared to be drawing comparisons from a company with nearly half a billion dollars in revenue. His client's business was a fraction of that size, with revenue and earnings flat year to year.
"It took many hours of conversations to kind of unwind that expectation."
Mark leads AMP Business Valuations, a boutique firm that values privately held businesses all day, every day. He spent about twelve years in commercial banking before starting it and holds the CVA and ABV valuation credentials plus a third in financial forensics. He quotes a flat fee, accepts no referrals or commissions, and has no stake in whether a deal happens.
That neutrality is rarer than it sounds. Nearly everyone else who hands an owner a number wants something.
Value Is Not Price
Ask Mark what a business is worth and he'll tell you it's a loaded question.
"The business can have different values to different people."
Fair market value is what a hypothetical willing buyer and seller would agree on. A strategic acquirer or a private equity firm may see something else entirely.
Price is a different thing. On Main Street, a business broker runs the numbers a few ways, picks a figure, and lists the company on an online marketplace, much like Zillow or Redfin, to test the market and negotiate from there. Above roughly $2 million in EBITDA, M&A advisors and investment bankers don't publish a price at all. They build a memo and a data room, work their Rolodex, and negotiate from whatever interest comes back.
A valuation, in Mark's definition, is a report built to professional and ethical standards, with the assumptions laid out where they can be challenged.
A price is a number someone is testing. A valuation is a number someone can defend.
The Free Valuation Is an Oil Change
There is a whole industry around valuations. Some are free prospecting tools. Some come with an offer to fix whatever lowered the number. Some come from people promising to sell you for more.
Mark compares the first kind to a nearly free oil change.
"They come out and they're like, hey, if you don't also pay us an additional two thousand dollars, your car might break tomorrow."
Nobody likes being put in that position. What you wanted was feedback from someone without skin in the game.
Then there are the intermediaries chasing a listing. Mark has heard, anecdotally, of people who make the report as pretty as they can and FedEx it in beautiful packaging to win the engagement, whether or not the business can sell at that price.
"It's a bit of a wild west out there."
The damage comes from anchoring. Once an inflated figure is built into a financial plan, or into a conversation among family members who co-own the company, Mark has seen it create problems that end in litigation and legal fees.
Before you trust a number, ask what the person who produced it gets paid for.
AI Is Your Best Cheerleader
Owners are now pasting their financials into ChatGPT and Claude and asking what the business is worth. The estimates aren't terrible. Mark, increasingly the second stop after the AI, is always pro information. His caveat is where the model gets it: often from that same lead-gen content, or from public-company comparables that have nothing to do with a small private business.
And there's a second problem.
"The AI is gonna always kind of be your best cheerleader."
Go in believing you've been wronged, and it will agree with you.
The bigger issue is accountability. You want the lawyer who drafted your purchase agreement defending it if there's ever a lawsuit, and the same applies to every expert on your deal team. They're there to stand behind their work in the worst-case outcome. As Peter put it, you can't send an agent to the courtroom.
Mark can go. When a valuation gets contentious, in a divorce, or between partners who skipped the shareholder agreement because they were best friends at the time, his job is to explain how he reached his conclusion to the attorney and to the judge or jury. Nobody litigates a whole 50- to 100-page report. It comes down to four or five judgment calls, and his credentials bind the rest of the report to professional standards.
An estimate nobody will defend is only an estimate.
Narrative and Numbers
Aswath Damodaran's Narrative and Numbers was one of the first valuation books Mark read, and the title has become his working definition of the job.
"Ultimately a business valuation is you're telling a story. You're connecting the numbers and the narrative to arrive at a value."
Financial data, industry benchmarks, and comparable transactions tell part of it. The rest comes from asking why numbers went up, why they went down, and what was non-recurring. Then the forward view: one, three, and five years out.
"We are not fortune tellers."
The standard is what's known or knowable as of the date of valuation. When the job is done well, he can sit down with every partner in a buyout, walk through the number, and see nodding heads.
If the story and the numbers don't agree, one of them is wrong.
Bring In Switzerland Before the LOI
Mark began answering from the sell side, and Peter pulled him back to the buyer's seat. Buyers meet unrealistic expectations from two sources. One is the owner who has never sold a business. The other is the seller influenced by a banker incentivized by transaction size. A buyer can beat them up, run their own assessment, or bring in the Switzerland of valuations, and that doesn't have to wait for quality of earnings, which typically comes after the LOI.
Mark says it can be a fairly quick process. In a CIM, the glass is always half full. His deliberately exaggerated example is 90% customer concentration: the cash flow looks great, but neither the price nor the proposed structure is risk adjusted. He gives buyers a few things to push back on, and the seller's reaction does the rest. Either they're happy to discuss it, or the answer is:
"I have 10 other buyers that are not asking those questions."
In that case, move on and save the time and money.
The same play works from the other direction. Proprietary search turns up owners who weren't for sale, and the smart move is to tell them to hire an independent, credentialed third party before anyone talks price, because an owner with no reference point will probably be disappointed by any offer. Mark would want the same if someone knocked on his door.
"You don't know what you don't know."
The work isn't duplicated. It starts the data room a buyer will ask for anyway.
How a seller responds to an honest question about risk is a filter you can use early.
Same EBITDA, Different Business
Take two service businesses, each earning $1 million in EBITDA. In one, the founder brings in the clients, runs the big accounts, and directs the team. In the other, a leadership team does that work, and clients arrive through a process the owner isn't part of.
To Mark, the difference is transferability risk. Clients may not transition to new ownership, and the team may not know how the work gets done. Owners often resist stepping back out of pride, as if being less involved meant being less important.
"It's quite the opposite."
Businesses with a strong management team and less owner dependency, he says, "trade for higher multiples."
He's working on it in his own firm. His coaches told him he was the bottleneck, and he agreed. His example: paying for a single software seat to save money, then realizing he couldn't take a vacation because nobody else had access.
"Why don't I spend another 50 bucks a month and empower my team?"
For observable evidence, Mark reads Google and social media reviews. If every review names the owner, the clients are tied to the owner. If they praise the team, that points to enterprise goodwill rather than personal goodwill, a distinction that also matters in divorce cases in some states. He also asks where leads come from: a tracked, repeatable process, or "handshake deals at a country club."
Then there's replacement cost. A founder covering marketing, operations, and strategy on a low wage might take three hires to replace, or one general manager at higher compensation. Paying yourself less to show higher earnings won't hold water.
Step one is awareness. Reducing owner dependency takes a year or two, so start before there's a buyer.
Add-Backs Cut Both Ways
Mark's software story also runs in reverse. Give every team member the license the owner was keeping to one seat, and the cost moves from a personal plan to enterprise grade. Adjustments like that reduce EBITDA, sometimes by more than the discretionary spend added back.
Mark calls it the negative add-back. The traditional kind (personal expenses, family members on payroll, the management meeting that was really a beach trip) arrives on a spreadsheet, and he scrutinizes every line. Owners want to have their cake and eat it too: a low taxable income, and a valuation on the full number.
As Peter put it, tax avoidance becomes add-backs.
Mark's advice to any owner within three years of selling is to clean it up.
"You're never gonna get full value for those add-backs."
A buyer will always discount earnings they have to take on faith.
When the Trailing Twelve Doubles
Consider a live deal Peter brought to the conversation. The business had previously topped out around $1.2 to $1.3 million in EBITDA. The trailing twelve months show $2.4 million.
Mark likes trailing-twelve data because it's the most recent. But it's often assembled from mismatched statements, such as cash-basis year-end figures combined with accrual-basis interims. Timing alone can distort it. An insurance premium, tax payment, or annual software subscription paid at the deadline one year and a month early the next can be counted twice in a single twelve-month window, and prepayments collected early cut the other way.
"Maybe it's real, but that's where the narrative and numbers need to connect."
In this case, the jump came from programmatic advertising, a brand-new revenue stream. A new line can knock it out of the park. More often, a sudden peak means an owner who decided to sell at the top.
"We pay present value for future expectations."
Most small businesses don't have a forecast. If earnings are consistent, Mark capitalizes them at a long-term growth rate. If not, he builds one, and contracts or a known retention rate reduce the risk and raise the multiple.
On multiples, he is a cash-flow person: EBITDA, with some weight on revenue for early-stage or high-growth companies, and generally not seller's discretionary earnings. Charlie Munger famously dismissed EBITDA altogether. Mark's answer: the criticism fits the "adjusted" earnings of public companies better than small-business deals, where most buyers share a general standard. The buyer's anchor is Warren Buffett's owner earnings, the cash the business generated for its owners, which is what finances a deal and produces a return.
First understand what changed. Then ask how much of it you can reasonably expect to continue.
The First Question
What is the one question a buyer should ask before getting attached to a deal? Mark, the numbers person, didn't reach for a number.
"I'd want to know why is the owner selling."
That is the whole point of valuation. There is a reason someone is selling, and it's a primary driver of how you approach the transaction. Everything else is evidence to support that narrative. The buyer's skill is uncovering motivation. Mark's skill is telling you, on a risk-adjusted basis, what the business is worth.
Anyone operating a business should get it valued now, before sitting across from a seller. The job of a CEO is to drive enterprise value, and it's hard to influence a number you don't know.
Do to yourself what you're going to do to the market.
Listen to the Full Conversation
Hear Mark Ahern explain how independent valuations differ from broker pricing, where AI estimates go wrong, how he tests owner dependency and add-backs, and what to ask when trailing-twelve EBITDA suddenly doubles, on the Agency Acquisitions & Exits Podcast.
You can find Mark on LinkedIn, or schedule a complimentary call at ampbusinessvaluations.com.
