3 Simple (and Often Overlooked) Steps to Increase Your Business Valuation
3 Simple (and Often Overlooked) Steps to Increase Your Business Valuation
When business owners think about valuation, most people instinctively focus on the big, obvious drivers.
Strong EBITDA performance.
Consistent growth.
Recurring revenue under long-term contracts.
Sales & operations function independently of the owner.
All of those things matter, and any buyer will look at them closely.
However, in real transactions, valuation is not driven by headline numbers alone. It is heavily influenced by risk, and how confident a buyer feels that the business they are buying will continue to perform after completion.
Over the years, I have seen many deals where value was lost not because the business was weak, but because relatively simple things had been overlooked. These issues often come to light during due diligence and can materially affect price, structure, or leverage in negotiations.
Below are three straightforward but frequently neglected actions that can significantly increase your business valuation by reducing perceived risk for a buyer.
1. The Quality of Your Customer Data
In most acquisitions, the primary asset being acquired is not equipment, IP, or even people. It is the customer portfolio.
Despite this, I have lost count of the number of times I have reviewed customer data during due diligence and found it to be patchy at best.
Common issues include:
Incomplete or missing customer addresses
No named site contacts
Missing phone numbers or email addresses
Unclear service scope per customer
Ambiguity around which contracts are active
Individually, these issues may feel minor. Collectively, they create uncertainty.
From a buyer’s perspective, poor customer data raises immediate concerns about what will happen after completion. If they cannot easily contact customers, confirm service arrangements, or transition accounts smoothly, the risk of disruption and contract attrition increases.
Clean, complete, well-structured customer data does the opposite. It gives a buyer confidence that:
Customers can be contacted quickly
Service transitions can be planned properly
Integration can be executed with minimal disruption
That confidence directly supports valuation. In practical terms, good customer data is genuinely worth its weight in gold.
FAQ: Does this mean I need a CRM?
A CRM is a great way of tracking customers and sales opportunities. However, whether it’s a high end CRM or a simple spreadsheet, the most important thing is that it is updated regularly.
2. Customer Contract Paperwork
It is remarkable how often contractual services are being delivered with no formal contract in place.
In many cases, the only evidence of agreement is an email exchange. Sometimes it is little more than a handshake. While this may feel fine operationally, it introduces risk during an acquisition.
A step up from this is having customers signed up to their own terms and conditions, often supported by a purchase order. This at least provides clarity on what has been agreed. However, buyer caution often increases at this point because customer-imposed terms frequently include clauses that are punitive or unbalanced.
Uncapped liability, aggressive termination rights, or vague service obligations are all red flags in due diligence.
Where possible, it is worth pushing back on customer terms and negotiating more balanced positions. Even incremental improvements can materially reduce perceived risk.
Best of all is when customers have signed your terms and conditions.
A strong, well-drafted set of customer terms is one of the most underrated valuation levers available to business owners. At a minimum, these should include:
Clear termination and notice periods
Liability capped at a reasonable and commercial level
Well-defined service scope and responsibilities
One clause that is often overlooked but critically important is a right to assign.
A right to assign allows you to transfer a contract to another party in the event of an acquisition. When this is included as standard in customer paperwork, it gives buyers a much higher degree of certainty that contracts will not be terminated simply because ownership has changed.
From a valuation perspective, this is powerful. It directly reduces post-completion revenue risk and strengthens your negotiating position.
FAQ: Should I ask all my existing customers to sign new contracts?
In reality, this approach is not practical. However, at the point of contract renewal, steps should be taken to transfer customers onto more favourable terms. Any new customer quotes should be issued with your own, well-drafted Ts & Cs attached.
3. Annual Price Increases
When I am completing commercial due diligence, one of the biggest red flags I look for is a lack of annual price increases.
Holding prices flat may feel like a good way to maintain customer goodwill, but over time it allows inflation to erode margins. More importantly, it sets an expectation with customers that prices will not increase.
This becomes a problem during and after an acquisition.
Once a business changes hands, a new owner will almost always want to implement regular price increases. If customers are not used to this, they are more likely to feel aggrieved, challenge the change, or even terminate their contracts.
The message any buyer wants to communicate after completion is simple: business as usual.
If annual price increases were not part of the previous operating rhythm, introducing them post-acquisition creates unnecessary friction and risk. That risk will often be reflected in valuation, either through price adjustments or deal protections.
By implementing modest, consistent annual price increases ahead of any sale process, you:
Protect margins against inflation
Normalise price changes with customers
Reduce post-deal disruption risk
Increase buyer confidence
In short, you make your business easier to buy.
FAQ: Will raising prices jeopardise my relationships with my customers?
The vast majority of customers understand that price increases are a necessary part of good business. In my experience, very few customers will object, and those that do can be addressed on a case by case basis.
A Final Thought on Valuation
Most value is lost in M&A not because businesses lack potential, but because buyers identify risks that could have been addressed earlier with relatively little effort.
High-quality customer data, robust contract paperwork, and disciplined pricing are not glamorous initiatives. They are operational basics. However, they are also powerful signals of a well-run, low-risk business.
When these elements are in place, buyers feel more confident. When buyers feel confident, valuations improve and negotiations become easier.
If maximising enterprise value is a goal, these are three simple places to start.
