Over the years, I have seen small business owners make the same costly mistake—they assume they know what their company is worth without ever getting a professional valuation.
Some go with a number based on their gut feeling, others compare themselves to a competitor down the street, and a few even just take the first offer that sounds “reasonable.”
But here’s the thing: when you’re buying or selling a business, pricing it wrong can mean leaving money on the table, scaring away buyers, or even worse—getting stuck in a deal that collapses at the last minute.
Valuation is more than just slapping a price tag on your business. It’s about understanding its true financial and strategic value. Whether you are looking to sell, attract investors, or plan for the future, knowing where you stand is crucial. This applies to all businesses, and for small and medium enterprises (SMEs), the stakes can be even higher, as often payouts could mean retirement funds or the step into another project.
Small and Medium Enterprises, Valuation, Mergers and Acquisitions, Mauritius.
Why Valuation is Critical for SME Owners
I have met many SME owners over time who thought that valuation is something only big corporations worry about. Sometimes, the price tags can be discouraging as well. But SMEs need it just as much.
Here's why:
1. Selling Too Low or Too High Can Cost You Everything
I have seen business owners in a rush to sell, accepting an offer just because it seems fair. Later, they realize their business was worth far more. On the other hand, some owners hold out for an unrealistic price, only to watch potential buyers walk away. A professional valuation ensures you set the right price—one that reflects your business’s real worth while keeping negotiations smooth.
2. Buyers and Investors Will Do Their Own Homework—Will You?
If you’re selling your business or seeking investors, you can be sure they’ll conduct their own valuation. If your asking price is based on guesswork rather than solid financial analysis, you’re starting negotiations at a disadvantage. You need to walk into those discussions with confidence, backed by facts.
3. Raising Capital Becomes Easier
Many SMEs need funding to expand, but banks and investors don’t hand out money based on passion alone. They need to see numbers, projections, and evidence that your business is worth investing in. A valuation report strengthens your case, whether you’re applying for a loan or pitching to investors.
4. Business Planning and Succession—What’s Next for You?
If you are thinking of stepping away from your business in the future, having a valuation now can help you plan. Whether you are passing it down to family or preparing for a sale, knowing its value ensures a smooth transition.
The Unique Challenges of Valuing an SME
Now, valuing an SME can be challenging. It’s not as simple as checking the stock market for a public company’s share price.
Here’s what makes SME valuation tricky:
Limited Market Comparisons: Unlike big corporations, SMEs do not always have clear benchmarks. It’s hard to compare a family-run textile shop to a fast-growing fintech startup.
Intangible Assets: Many SMEs do not just have physical assets; their real value might lie in their customer relationships, brand reputation, or specialized knowledge. These factors aren’t always easy to measure.
Fluctuating Market Conditions: Even within a strong economy, you get cycles, regulatory changes, and external shocks (like the COVID-19 pandemic) which impact valuations. Measuring changes in risk premium for SMEs can be really tricky.
Incomplete Financial Records: Some SMEs do not keep detailed financial records, making it harder to assess profitability and future potential. A valuation expert should be able to help adjust for these gaps.
The Cost of Getting It Wrong
I have seen firsthand how an incorrect valuation can ruin a deal. Some owners are ready to sell at a fraction of their true worth, while others lose out on buyers by insisting on an inflated price. Then there are those who never realize their business had untapped value—until it’s too late.
A valuation isn’t just a number—it’s the foundation for smart business decisions. Whether you’re selling, growing, or just planning ahead, knowing your company’s true worth puts you in control.
If you are an SME owner, do not leave your biggest financial decision to guesswork. Intelitegen is dedicated to SME business valuations, ensuring you have the insights needed to make informed, profitable decisions.
Feel free to reach out: info@iegen.pro
Adil Aboobakar, CFA
Founder, Intelitegen
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