S28 · The Exit

Valuation & Exit

Multiples, Buyers, The Process

Section 28 / The Exit / by Rob Ward

Founder's Principle

Build Worth Buying

Build a brand worth buying, even if you never sell. The disciplines that drive high valuations; clean finances, strong brand, diversified channels - are the same ones that make a great business. Have targets in mind early. Ask yourself: what does this brand need to look like?

Key topics covered

What Makes a DTC Brand Valuable
Value Drivers (in priority order):
Understanding the Different Types of Exit
Most founders think of an exit as a single event: sell the business, get a cheque, move on.
Valuation Fundamentals
Value Killers:
Valuation Methods
EBITDA Multiple (standard for $5M+): Enterprise Value = Adjusted EBITDA x Multiple. Every founder thinks their add-backs are legitimate; buyers push back. The multiple is where negotiation happens.
Preparing for Sale
Start 12-24 months before you want to sell.
The Exit Process
The Exit Process is the formal, advisor-led sequence that runs from "we're going to market" through to money in the bank. The broader 12-24 month grooming runway covered in Preparing for Sale above happens before this.
Post-Exit Considerations
Earnouts: Typically 20-40% of consideration tied to 1-2 year targets. The problem: you lose control but payout depends on performance. Best case: no earnout.
Current 2025/2026 Market Multiples
Indicative EBITDA Multiples for a Premium Process / Strong Asset:

Rob's take

I get asked more than you'd think: how do you sell a business for nine figures? The answer nobody wants to hear is that along the way, you have to say no to seven figures and eight figures. And those opportunities will come up. Someone will offer you $1M when $1M would change your life. Then $10M when $10M seems like more money than you'd ever need. Then $30M, $50M. Each time, you have to decide: is this enough, or do I believe there's more?

And it's not just about the money. It's also: am I done here? Am I happy with what we've achieved? Do I still have the energy and hunger to keep pushing, or am I holding on out of habit? Those questions matter as much as the number on the offer. At some point, there's a figure that genuinely changes your life. After that, more money may change your lifestyle but not your life. Know your risk appetite, know whether you're still the right person to take the business to the next level, and be honest with yourself about when enough is enough. Life is short.

Exit value is usually created years before any buyer appears. By the time a process starts, most of the real work has already been done or neglected.

Every decision from day one builds or destroys exit value and founder optionality. The single biggest factor? A team that operates without you. See Section 25: Team & Culture.

What Makes a DTC Brand Valuable

Value Drivers (in priority order):

Understanding the Different Types of Exit

Most founders think of an exit as a single event: sell the business, get a cheque, move on. In reality, there are several different transaction types, each with different expectations, different readiness requirements, and different implications for the founders. Understanding these early helps you plan the right path, not just the final destination.

Growth-Stage PE (Partial Exit):

Growth equity investors are used to looking at founder-led businesses that don't have every detail buttoned up. They expect lean teams, imperfect governance, and gaps in documentation. They're buying potential and backing the founders to keep building. The founders are typically only partially selling down and still deeply incentivised to grow the business, so founder risk isn't the primary concern.

What growth PE does care about: revenue trajectory, margin profile, market opportunity, and whether the founders have the hunger and capability to scale. They'll help professionalise the back office after the deal. That's part of what they bring.

Full Exit - Strategic Buyer (Trade Sale):

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What you'll walk away with

Score your exit value drivers and review the biggest gaps quarterly.
Value killers identified and being addressed (customer concentration, founder dependency, declining growth, messy books, legal/IP issues)
Books cleaned up (accrual accounting, GAAP/IFRS compliant, personal expenses separated)
Processes documented (SOPs for every core function)
Mitigate key person risk with retention plans and a non-founder operating model. See Section 25: Team & Culture.
Put professional management in place or plan it where it will improve exit options.
Buyer universe mapped early - trade buyers, adjacent categories, active PE firms. If the pool is small, strategy in place to create competitive tension.
Growth story prepared (clear narrative with quantified upside opportunities)
M&A advisor identified (sector-specific DTC/e-commerce experience)
Tax advisor engaged 12+ months before potential sale. Cash vs stock implications understood.