The Importance of a Breakout Valuation

For entrepreneurs, the business isn’t just an asset—it’s the product of your imagination, your grit, and years of sacrifice. You’ve poured in time, capital, and personal financial risk to bring your idea to life. When the moment finally comes to exit, the value you receive becomes the compensation for all those risks and tradeoffs. It’s one of the defining moments of the entrepreneurial journey. And it’s worth approaching with the respect, clarity, and intentionality it deserves—for yourself, your family, and the years you invested.

The natural question is: How should you value your company?
Is your answer purely a math formula—EBITDA multiples, revenue multiples, customer counts?
If so, this is exactly the conversation you need to have.

Even though academics and finance professionals work hard to make valuation feel objective, the truth is that valuation is subjective. Understanding why investors use objective frameworks—and how those frameworks are applied—gives you the leverage to pursue what you truly want: a Breakout Valuation.

Over time we’ve come to appreciate a fundamental truth: valuation represents today’s view of what the company can produce tomorrow. Private market investors, however, often insist on valuing a business based primarily on what it produces today. In theory, just like public market stocks, valuation should reflect the net present value of future earnings. The problem? Forecasts are imperfect at best. No one can predict the future with precision. Forecasts inevitably carry the biases, assumptions, and worldview of the person creating them.

And that is exactly why valuation matters more to you than to anyone else.
Yes, other shareholders may care—but as the founder, you are the one with the most to gain or lose when someone assigns a value to your life’s work. Valuation determines the economic outcome when ownership and rights transfer. Ultimately, it defines what your business is worth to the world—and what that worth means for your future.

As your business matures, knowing its value becomes increasingly critical. A solid valuation can support financial planning, create options for using ownership as collateral, and shape long-term decisions that impact your family and future generations.

Valuable businesses also create something almost magical: they free the founder. When a company becomes truly valuable, it gives you the ability to shift from being the lead employee to being the owner. It becomes easier to attract and keep great employees. Customers lean in. Strategic partners take your call. Value creates gravity—pulling in talent, customers, and relationships. And most importantly, it creates options for owners.

Now it’s time to flip the script. Instead of letting outsiders dictate what your business is worth, you can take control. You don’t need to be a valuation professional—you simply need the right context and the ability to articulate what actually drives value in your business.

At its core, valuation is straightforward: it is today’s view of your company’s capacity to produce future cash flows. Your job is to cast that vision—to define what the business can truly become. While current performance matters, future opportunity matters just as much. The stronger and more credible your future narrative, the more likely you are to achieve a Breakout Valuation.

Valuation may be subjective—but understanding it is essential.

What’s your take on the power and importance of owning a valuable business?
Share your thoughts in the comments or reach out directly at patrick (at) hillcapitalcorp (dot) com.

Patrick E. Donohue, CFA