When you consider your business's value, you might imagine your accountant’s spreadsheet or a basic profit multiple. But when banks, investors, and potential buyers assess value, they don’t just focus on numbers. They also consider risk, reliability, and return.

Each group views your business through a slightly different lens. Knowing how they assess value helps you present your business better. It lets you negotiate with confidence and get better results. This is important whether you want finance, investment, or are getting ready to sell.

At RJD Advisory, we see three common perspectives: the banker’s view, the investor’s view, and the buyer’s view. Let’s unpack what each one really looks for.

1. How Banks Assess Business Value

Banks care about one thing above all: can you repay the loan?

They view your business primarily as a source of cash flow and collateral. Their assessment looks at how well you meet financial obligations. It also checks if you avoid taking on too much risk.

What they look at:

• Historical and forecast cash flow: Is there consistent, predictable income to service the debt?

• Debt Service Coverage Ratio (DSCR): Banks usually set their own rules. For instance, they may require at least $1.50 in operating cash flow for every $1.00 in loan repayment.

• Security and collateral: What assets can back the loan? This might include property, machinery, or personal guarantees.

• Financial discipline: Up-to-date statements, tax compliance, and clear separation between business and personal finances.

What reduces value in their eyes:

• Irregular earnings or seasonal volatility

• Poor record-keeping or late lodgements

• High gearing or existing loan commitments

• Overreliance on a few customers or the owner

Key takeaway: Banks prioritise stability and serviceability, not growth potential. They reward consistency, documentation, and prudent financial management.

2. How Investors Assess Business Value

Investors are looking for growth potential and a return on their capital that compensates for risk. Their focus is less on collateral and more on future earnings and scalability.

What they value:

• Return on investment (ROI): This shows the profit a business earns for every dollar invested.

• Scalability: Whether the model can grow without costs rising at the same rate.

• Competitive advantage: A clear differentiator of the product, brand, IP, or recurring revenue model.

• Governance and transparency: Quality reporting, clear structure, and good decision-making processes.

• Exit potential: How they’ll realise a return, via dividends, sale, or capital growth.

Investors understand that not all growth paths are linear, but they expect evidence-based plans, not hope.

What turns investors off:

• Unclear financial forecasts

• Overly optimistic assumptions

• Dependency on the founder

• Weak governance or poor visibility of numbers

Key takeaway: Investors price risk into the deal. The better your strategy, reporting, and team, the higher the multiple they’ll use for your earnings.

3. How Buyers Assess Business Value

Buyers blend these two mindsets. They seek reliability like a banker and potential like an investor.

No matter if it’s a strategic buyer, a private buyer, or a management buyout, they’re looking at how the business will do after you’re gone.

What they assess most:

• Earnings quality: Normalised, repeatable profits adjusted for one-off items.

• Transferability: Can operations continue without you?

• Customer base: Breadth, loyalty, and recurring revenue.

• Systems and processes: Documentation, efficiency, and technology integration.

• Team strength: Capability, retention, and leadership depth.

• Market position: Brand reputation, pricing power, and barriers to entry.

Red flags that lower offers:

• Owner dependence (you handle everything)

• Weak handover plan or unclear succession

• Inconsistent profitability or unverified data

• Legal, tax, or compliance risks

Buyers often apply a risk-adjusted earnings multiple. In simple terms, the safer the business looks, the higher the multiple, and the higher the price.

4. Common Across All Three: The Risk–Return Trade-Off

All three groups, banks, investors, and buyers, assess business value using the same principle: the higher the risk, the lower the value.

A business with steady earnings and a skilled team can sell for double the multiple of a competitor with poor records or too much owner reliance. This shows the importance of balancing risk and return.

5. How to Present Your Business to Each Group

You can’t change how these groups see value. But, you can get your business ready to match what they want.

For banks:

• Keep accurate financial statements and forecasts.

• Maintain compliance and manage debt prudently.

• Separate business and personal finances.

For investors:

• Build a data-backed business plan with realistic projections.

• Highlight scalability and exit potential.

• Demonstrate good governance and transparency.

For buyers:

• Document systems, processes, and client relationships.

• Showcase team capability and customer retention.

• Provide 3–5 years of clean, normalised financial data.

Presenting your business professionally signals credibility, and credibility directly influences value.

Key Takeaways

• Banks value stability and repayment capacity.

• Investors value growth, scalability, and governance.

• Buyers value transferability and proven earnings.

• In every case, risk perception drives the final number, not just revenue or profit.

• The more transparent, structured, and independent your business appears, the more confident others feel about investing in it.

How We Can Help

At RJD Advisory, we help business owners plan ahead, not just react at sale time. Our independent valuations, pre-sale readiness reviews, and value improvement plans show you where to focus for the best return when you decide to exit.

• Expert Business Valuation – Get an accurate, market-driven valuation.

• Financial & Operational Readiness – Ensure your business is attractive to buyers.

• Exit Strategy Planning – Structure your sale for tax efficiency and long-term financial success.

• Smooth Transition Support – Make the sale seamless for both you and the buyer.

We don’t just help you sell, we help you exit on your terms, with confidence.

Book a consultation today to start preparing your business for sale.