How to value a Colorado small business in 2026

Every Colorado owner who's ever thought about selling has heard a number. It came from a friend, a peer group, a business broker's cold email, or a napkin at a rotary lunch. Those numbers are usually anchored to one of two things — revenue or a generic industry multiple — and both of them are the wrong place to start.

A defensible valuation for an owner-operated Colorado business — the kind buyers will actually underwrite — starts with a clean earnings number and applies a multiple grounded in your specific risk profile. Here's how that actually works.

Start with a clean earnings number, not revenue

Businesses under roughly $2M in owner earnings are valued on Seller's Discretionary Earnings (SDE). Above that, buyers switch to EBITDA. In both cases you're adjusting reported profit for one-time items and — critically — for owner compensation and personal expenses run through the business.

Common add-backs include the owner's salary above a fair-market replacement wage, personal vehicles, health insurance for family, a one-time legal fee, and non-recurring capex. Missed add-backs are the single most common reason Colorado owners undervalue their own business by 15–30%.

The multiple ranges you should actually expect

For Colorado owner-operated businesses in 2026, honest ranges look roughly like this:

• Service businesses (HVAC, landscaping, cleaning, IT): 2.5x–4.0x SDE, higher for recurring-revenue models.
• Trades and construction: 2.0x–3.5x SDE, discounted when project-based and owner-fronted.
• Retail and restaurants: 1.5x–3.0x SDE, wide range driven by lease terms and location.
• Manufacturing and distribution: 4.0x–6.5x EBITDA once past the SDE threshold.
• Professional services (accounting, consulting): 3.0x–5.0x SDE, heavy discount if revenue is owner-dependent.

What actually moves the number, in order

1. 01

   Financials that reconcile

   Buyers can't underwrite books they don't trust. Three years of reviewed statements that tie to tax returns is table stakes — not a nice-to-have.
2. 02

   Owner independence

   If you personally hold the top 10 customer relationships, buyers apply a "you leaving" discount that can eat an entire turn of multiple.
3. 03

   Customer concentration

   Any single customer above 15% of revenue gets scrutinized. Above 25% and lenders start requiring earn-outs instead of cash at close.
4. 04

   Recurring vs. project revenue

   A dollar of contracted recurring revenue is worth roughly 1.5x–2x a dollar of project revenue at exit. Nothing else on this list moves the multiple more.

The Colorado-specific factors buyers ask about

Colorado buyers — and out-of-state buyers evaluating a Colorado target — reliably ask three questions that don't come up in every market: workforce availability (especially trades), commercial lease cost trajectory in Front Range submarkets, and water/utility exposure for anything with a physical footprint. Have answers ready before the first buyer conversation.

What to do before you get a number from anyone

Get your last three years of P&Ls, tax returns, and a clean add-back schedule in one folder. Know your top 10 customers and what percent of revenue each represents. Write down what you personally do in the business that no one else can. That's the packet any advisor — including me — needs to give you a real read instead of a marketing number.