Build a Business Valuation Spreadsheet You Can Explain

Set up the Inputs and Their Evidence

Choose a completed financial period and use it consistently. Put the period, currency, preparation date, and person responsible at the top. Keep a reference to the underlying accounts or operating record beside each input.

Keep calculated fields separate from entered figures. For an unknown input, record Unknown and assign someone to establish it. Don't fill it with the model's planning assumption and then label the result your business's measured performance.

Reconcile EBITDA Before Applying the Multiple

EBITDA means earnings before interest, tax, depreciation, and amortization. Normalized EBITDA is the result adjusted to the stated ongoing operating basis. Keep the reported result, each proposed adjustment, and the adjusted result on separate lines.

The MSP model counts profit after a fair-market owner salary. If the owner performs technical work, include that delivery labor. Don't remove the owner's pay while assuming their work will continue without a replacement cost.

Have finance explain why an expense would cease or a replacement cost would arise. Keep the supporting record and the person who accepted the assumption. A personal-looking expense isn't automatically removable if the business still needs the underlying work or asset.

For a worked example, use the US stable model's $730,276 EBITDA. That is the starting earnings input for the following calculation, with the model's operating assumptions held unchanged. It isn't a substitute for reconciling your own accounts.

Use the Size Curve With Its Market Year

The model's main valuation curve uses the iTValuations 2025 market assumptions, with yearly review. Its US multiples are set by EBITDA size and interpolated in a straight line between the stated rows. They are a planning reference, not a current offer.

For the hypothetical example's $730,276, use the interval from $500,000 to $1,000,000. Calculate the multiple as 4.75 + (6.50 - 4.75) × (($730,276 - $500,000) / ($1,000,000 - $500,000)) = 5.555966. The resulting value is $730,276 × 5.555966, or about $4,057,386.

The model's conservative comparison uses a separate curve: the adviser's Good column has 3.0 times EBITDA at $600,000 and 4.0 times at $800,000. For the worked example, calculate 3.0 plus (($730,276 minus $600,000) divided by ($800,000 minus $600,000)) multiplied by (4.0 minus 3.0). That gives 3.65138; multiplying it by $730,276 gives about $2,666,513. Keep the unrounded multiples in the calculations even if the displayed cells show fewer decimals.

That produces a model-based comparison from about $2.67 million to $4.06 million. It isn't a confidence interval or a range every buyer must accept. The underlying curves use different assumptions; retain their names, dates, and limitations with the outputs.

Keep the Operating Inputs Out of an Invented Score

The US example's recurring share is 73%, counting managed services and recurring product together. That describes its mix. Don't multiply the valuation by 73%, or award a premium automatically because the share exceeds a target. The model supplies neither rule.

Its annual retention planning input is 95%. Enter your own result using a defined basis and period. Client-count retention and revenue retention answer different questions, and adding new clients doesn't measure whether the original client group stayed.

For owner dependence, list the work only the owner currently performs. Price a proposed replacement with the relevant actual cost, then show any effect on normalized EBITDA. Keep transfer risks that aren't yet costed in the follow-up record rather than inventing a percentage haircut.

For concentration, calculate each client's revenue share from the client list. An average client fee doesn't establish how revenue is distributed. For a loss scenario, subtract lost revenue and add back only costs actually avoided, then recalculate the multiple at the changed earnings level.

Compare an Offer on the Same Basis

Put a proposed offer in a separate area of the spreadsheet. Ask your adviser to confirm what the headline figure represents, which earnings the buyer used, and how the payments and adjustments work. Keep unconditional amounts separate from payments dependent on later events.

In an MSP exit interview, Don Viar describes using a spreadsheet to compare his deal with the growth he would need to beat it by waiting. He says the result favored the deal. That is his account of a decision, without an inspected spreadsheet or a demonstrated valuation method you can copy.

You can still ask the useful question: what must change in your business to make waiting preferable on your own objectives and assumptions? Model the work, costs, and timing explicitly. A higher future spreadsheet value alone doesn't establish that you can achieve it or that selling later meets your needs.

Give Every Unresolved Input an Owner

Before using the sheet in an offer discussion, have the responsible people check the inputs and formulas.

• Finance reconciles reported and normalized EBITDA, with support for every adjustment.
• The account lead confirms the recurring classification, retention basis, and individual client revenue list.
• The owner and delivery lead identify replacement work and costs behind the owner-dependence assumptions.
• The adviser reviews the valuation curves and market dates, then explains any alternative multiple used.
• The owner records the open assumptions and decisions that could materially change the comparison.

Start with the EBITDA bridge and leave the unresolved fields visible. A spreadsheet you can explain is a useful preparation tool. A precise answer built from unexplained inputs is simply a precise-looking guess.