117 - What Kills Valuation
Valuation drops when risk rises. In this episode, we break down the key risk factors that kill company value, like key person risk, missing data, or undocumented processes, and explain how to de-risk your business before an exit.
What Kills Valuation
A profitable business doesn’t guarantee a strong valuation. Buyers don’t just assess opportunity; they assess risk. And most founders ignore that reality until it’s too late.
This episode breaks down the silent killers of company value and what you must eliminate to position your business for a high-multiple exit.
Key takeaways from the episode:
1. Valuation is a reflection of risk.
Investors and buyers don’t pay for revenue; they pay for predictable, transferable operations. If your business relies too heavily on you or lacks clarity, your valuation drops immediately.
2. Top risks that erode value.
• Key person dependency
• No centralised or accurate business data
• Poor management reporting
• Undocumented processes and roles
• Lack of financial visibility or forecasting
3. Risk isn’t just operational, it’s emotional.
If a buyer can’t trust the numbers, the systems, or the team, they won’t move forward. Reducing risk isn’t just about efficiency, it’s about increasing buyer confidence.
4. Think like an investor, not an operator.
Step outside your founder mindset. Ask: “Would I buy this business? Would I trust it to run without me?”
If the answer is no, your valuation already reflects that.
5. De-risk to grow your multiple.
Every risk you remove adds leverage. The cleaner documented, and the more independent your business becomes, the more valuable it is, even before you grow revenue.
Conclusion:
Valuation isn’t won through negotiation. It’s earned through structure.
This episode gives you the lens to spot hidden risks, clean them up, and position your business to command a premium on your terms, not the buyer’s.
Highlights:
00:00 Understanding Valuation Risks
00:06 Reducing Key Person Risk
00:08 Improving Management Information
00:14 Documenting Processes
00:20 Mindset Shift for Entrepreneurs
Links:
Website: https://www.marcogrueter.com/
LinkedIn: https://www.linkedin.com/in/marcogrueter/
Transcript:
What kills valuation, it's things like having too much risk. So what you want to do is reduce risk. Risk can be key person risk. Risk can be, you don't have a good management information, you don't have data in place, so that kills risk. It can be, you don't have your processes documented and so on. So that's all killing your valuation. So that's it. It's important from a mindset as an owner or as an entrepreneur to switch into or to go into the shoes of an investor and reduce that risk. And the more risk you take off, the higher your valuation.