Why Not All Business Valuations Are Created Equal

Ramzi Daklouche

Alright folks, welcome back to Transitions with Ramzi and Claudia—where we cut through the noise on business sales in Georgia. I'm Ramzi with VR Business Sales Atlanta, and Claudia is here with me, as always.

Claudia Luquerna

Hey everyone. And yeah, today—let’s talk myths. This one comes up in almost every first seller meeting: thinking business valuation works like appraising a house. If you’ve got two similar houses next door, same square footage, you expect a pretty tight price range, right? But with businesses, that idea falls apart—fast.

Ramzi Daklouche

Absolutely. Every week we see owners blindsided when they get two wildly different valuations—sometimes a million bucks apart, literally. And there’s this belief, I mean, it’s understandable, that numbers are numbers. But business value isn’t stamped on a deed somewhere.

Claudia Luquerna

No, and the gap comes down to how brokers actually do it—what math they pick, what assumptions they build in, and most importantly, who the valuation is for. I mean, a number meant to win over a seller is very different from a bank-ready report. I had an Atlanta owner a few months ago—we’ll keep it confidential—sent me two broker reports: one at $4.8 million, another at a hair over $3.3 million, so a difference of about $1.5 million. He truly thought it was a typo.

Ramzi Daklouche

Yeah, and the brokers weren’t incompetent. They just cooked the books differently, right? They each picked what helped their marketing goal. So, as we discussed back in our episode on Q4 valuations—it isn’t just about timing or industry, it’s also about who you’re asking and why. And you have to know how to spot what’s real, what’s fluff, and what can actually get through underwriting.

Claudia Luquerna

If the number looks too good to be true, it probably is. And buyers aren’t fooled. They just walk—quietly, but quickly. That’s where a lot of deals die before anyone even knows it.

Ramzi Daklouche

So let’s jump into the numbers, not theory. Just last week, we were seeing landscaping companies get listed up and down Atlanta—so, here's a real situation. Business brings in about $3.2 million revenue, $700K SDE. Broker A comes in hot with a $3.5M asking price. Broker B? More like $1.6M. That’s not a typo, folks—literally same SDE, same P&L.

Claudia Luquerna

Yeah, so Broker A used an EBITDA multiple—bit aggressive given the company just didn’t have the team or systems you really need to justify that. Broker B? They normalized everything, even stripping out owner perks and a couple of big insurance reimbursements. This dropped SDE to $560K. Also, Broker A totally ignored the fact that two customers made up, what, almost half the sales?

Ramzi Daklouche

Exactly. So, Broker B takes that risk into account, adjusts the price down. Then there’s the comps: Broker A goes national, pulling from markets like Dallas and Tampa where multiples run higher. Broker B uses nothing but local Atlanta comps, which are lower—because lending climate here is just different right now.

Claudia Luquerna

And owners, they see that $3.5 million and get fixated—they think, “That’s what I’m worth!” But anyone actually putting money on the table—a buyer, sure, but especially a lender—will only underwrite to the lower, reality-based number. That deal goes nowhere unless everyone resets expectations. Reminds me of that home services case—do you want to walk through that one?

Ramzi Daklouche

For sure. So, a home service business, about $2.8M in revenue, $600K SDE listed just over $1.3M. Pretty normal on paper. But when you dig, owner’s SDE includes about $130K he never actually paid himself—just worked three jobs and called it “profit.” That’s phantom money. Once you recast—put in real salaries for all those hats the owner wears, account for hiring techs and staff, cut in admin, even correct for some deferred maintenance—the SDE plummets, like $395K. The business loses almost $700K in value overnight, just because the real economics come out.

Claudia Luquerna

And this isn’t rare. Most owners, until they’ve sold or almost sold, don’t realize that brokers can stack “fake” add-backs. Banks see right through them. Kind of connects to what we were saying in our episode on emotional timing and deal readiness; if you fall in love with your biggest number, you can end up caught flat-footed because the institutions with the checkbook, they’ve got a whole different rulebook.

Claudia Luquerna

So, what actually matters to get a deal closed in Georgia? It’s not flashy SDE, it’s SBA approval. Lenders want one thing: confidence in the ability to service debt. If you don’t hit a 1.25 debt service coverage ratio, no matter how shiny the broker package, nothing else will matter.

Ramzi Daklouche

Right. And that’s why inflated numbers wasted everyone’s time. If a bank underwrites at $1.1 million, not $2.3 million, that’s the practical ceiling. We actually just saw a Georgia HVAC deal—same buyer, same business, two valuations. The aggressive one counted projections, future contracts, all these optimistic growth targets. The other focused on conservative, historical performance with cautious normalization. Guess which one survived? The conservative one—every single time. That’s the one that got to closing. The other number, honestly, buyers and lenders acted like it didn’t exist except maybe as a warning sign.

Claudia Luquerna

And deals die for the same reasons over and over: using the wrong metric, pumping up “one-time” add-backs, ignoring customer concentration, or assuming the owner’s role doesn’t matter. Add sloppy books and using national data when local multiples are lower, and it’s a recipe for disappointment. High interest rates right now are only making everything more conservative—buyers want proof, not pitch.

Ramzi Daklouche

Exactly—I always say, “Nobody pays extra for risk.” They want to see risk stripped out, not padded in. That’s why our approach puts everything through the gauntlet—full recast, adjustments for reality, real Atlanta comps, DSCR modeling, deal scenarios, risk analysis. We literally back-test against what’s selling on the market today—not what we hope sells. If it can survive underwriting scrutiny from banks here—in July 2024 Georgia? That’s a valuation you can actually close at.

Claudia Luquerna

Look, the short answer here is: not every valuation is made to last, or even designed to. There are marketing numbers, there’s educated guessing, and then there’s a tight, defensible, bank-vetted figure built off actual local comps. That’s what you want. Everything else is just paper.

Ramzi Daklouche

And if you’re thinking about going to market, talk to someone who’s built valuations that survive real-world tests. Don’t buy the dream—demand the number that closes deals, period.

Claudia Luquerna

We’ll wrap there for this week. If you’ve been handed a big valuation and want to know what it really means, reach out. And make sure to follow us for the next episode—we’ll keep cutting through the hype and help you prep for a real-world exit. Thanks, Ramzi.

Ramzi Daklouche

Thanks Claudia. Goodbye everyone—until next time.