How to Value a Business in a Post-COVID World: 7 Expert Strategies to Get It Right
Why Valuation Has Changed After COVID
COVID-19 flipped the business world upside down. Restaurants went digital, service providers moved remote, and retailers raced to build online storefronts. For business owners looking to sell or buyers hoping to invest, this new reality means one thing: traditional valuation methods aren’t enough anymore.
The post-COVID business landscape requires smarter, more adaptive strategies. Valuing a business today isn’t just about historical earnings—it’s about resilience, digital transformation, and future-proofing. Let’s break it all down.
What Is Business Valuation?
Business valuation is the process of identifying the value of the company in the economic. It's not just for selling—owners get valuations to plan exits, attract investors, or secure financing.
But in the post-pandemic world, it matters even more. Why? Because so many companies have gone through rollercoaster years. Buyers are cautious, lenders are stricter, and sellers need to justify their asking price with more than just balance sheets.
Tip: Think of your valuation as your business’s “report card.” The better prepared it is, the better your chances of a smooth, profitable exit.
The Big Three: Standard Methods of Valuation
Before we dive into what's new, let’s revisit the three most common ways businesses have been valued:
1. Asset-Based Valuation
This method adds up all the tangible and intangible assets, minus liabilities. It’s more useful for asset-heavy businesses like manufacturers or real estate firms.
2. Earnings/Income Approach
This method values a business based on its ability to generate profit, using metrics like Seller’s Discretionary Earnings (SDE) or EBITDA.
3. Market-Based Valuation
Think “comps” — this compares your business to others recently sold in the same industry, size, and location.
Post-COVID Insight: These models still work, but they need adjustments to reflect pandemic-era swings.
COVID’s Economic Wake: Shifts in Buyer and Seller Behavior
COVID changed the game—buyers and sellers are now thinking with a whole new mindset.
Buyers are now laser-focused on risk. They're asking:
- “Did this business survive COVID because of strong systems or just luck?”
- “Is revenue diversified across channels?”
Sellers, are now re-evaluating when the right time is to exit. Some want out fast after tough years. Others are holding out, waiting for better market conditions.
Tip:
Be prepared to answer how your business handled shutdowns, PPP loans, and recovery phases
Adjusting for 2020–2022 Financial Anomalies
COVID years were anything but normal. Revenue dropped sharply for some, while others boomed from demand shifts. That’s why normalized earnings have become a go-to strategy in business valuation. Instead of averaging five years, many brokers now:
- Use weighted averages, giving more weight to post-2022 recovery data
- Exclude one-time spikes or dips caused by COVID
- Normalize expenses like hazard pay, supply chain premiums, or rent concessions
Story: A gym in Arizona lost 80% revenue in 2020 but bounced back with online classes and wellness add-ons. Its valuation now reflects not just the bounce-back—but the adaptability.
Remote Operations, Tech Stacks & Automation: New Value Drivers
If your business added tech during COVID—like online ordering, CRMs, or automated scheduling—you’ve likely increased its value.
Buyers now value businesses with:
- Remote-work readiness
- Scalable tech infrastructure
- Automated customer service tools
Even simple tools like appointment schedulers or delivery apps show buyers your business is future-ready.
Tip:
Document your tech upgrades and process improvements—they're part of your valuation now.
Recalculating Discretionary Earnings in Today’s Climate
Seller’s Discretionary Earnings (SDE) includes profit + owner’s perks + add-backs. But now, you’ll want to adjust for:
- PPP loan forgiveness (not recurring)
- COVID-specific grants
- Temporary hazard bonuses
- Increased marketing or PPE costs
A skilled business broker will know how to sift through the numbers and spotlight what truly matters.
Working Capital and Supply Chain Volatility
Valuation isn’t just about earnings—buyers also look at working capital health. Post-COVID, supply chain disruption is a red flag.
Ask yourself:
- Are you consistently stocked?
- Are vendor relationships stable?
- Did you have to change suppliers or pay premiums?
Tip: Demonstrate how you managed supply chain issues or diversified vendors. That shows long-term resilience.
EBITDA vs SDE: Which Is More Reliable Now?
For mid-market and large businesses, EBITDA is still king. But for small businesses, SDE often paints a clearer picture.
Why? SDE includes the owner’s salary, benefits, and perks—often key components of a small business’s true profitability.
In today’s uncertain landscape, both metrics should be calculated and disclosed transparently.
Real-Life Example: Valuing a Restaurant That Survived COVID
Let’s say you own a neighborhood restaurant that:
- Closed for 4 months in 2020
- Switched to online delivery
- Partnered with DoorDash
- Reduced overhead by cutting dine-in space
A broker would compare 2019 and 2023 earnings, normalize 2020 losses, and highlight how your tech adaptation now improves profit margins.
Result:
Bottom line—those smart pivots and streamlined processes might actually boost your business’s value.
The Buyer’s Perspective in a Post-COVID Market
Buyers are more cautious but still hungry for opportunity. They’re looking for:
- Recurring revenue models
- Low overhead
- Clear SOPs (Standard Operating Procedures)
- COVID contingency planning
Tip:
Build a seller’s package that anticipates buyer questions—especially around pandemic recovery.
Industry Trends: What’s Hot and What’s Not in 2025
Hot Sectors (gaining value):
- Home services
- Health & wellness
- E-commerce and logistics
- Remote staffing agencies
Slower Recovery Sectors:
- Traditional retail
- Event planning
- Non-digital entertainment
Using a Business Broker to Navigate Post-COVID Valuation
A trusted business broker helps you:
- Interpret complex numbers
- Normalize financials the right way
- Match your business to the right buyer
At
First Choice Business Brokers Phoenix Northwest, we specialize in evaluating businesses with COVID-era context—so you get what your business is truly worth.
Common Mistakes to Avoid in Post-Pandemic Valuations
- Using only pre-2020 data
- Ignoring digital growth or pivots
- Underreporting discretionary add-backs
- Overestimating “potential” without performance proof
Tip:
Get a second opinion before you finalize your asking price.
Final Thoughts: Get the Most Accurate Valuation Today
The world’s changed, and so has the way we value businesses. Whether you’re buying, selling, or planning for the future, the right valuation opens doors. It gives you a clear picture—and a fair deal.
You don’t need to figure this out alone. That’s what we’re here for.
FAQ
1. Should I include 2020 revenue in my valuation?
Only as a reference point. Most brokers now adjust or normalize 2020–2021 data.
2. What if I had a PPP loan or grant?
Disclose it, but don’t treat it as profit. It's usually excluded from recurring earnings.
3. Does digital transformation increase my business’s value?
Absolutely. Tech-savvy businesses get higher interest and often better multiples.
4. How long does the valuation process take?
A standard broker-led valuation can take 1–3 weeks, depending on record readiness.
5. Can I value my business myself?
You can try, but buyer's trust and accuracy come from third-party or broker valuations.
Get in Touch:
First Choice Business Brokerage Phoenix
📍 21640 N 19th Ave Suite C9, Phoenix, AZ 85027
📞 (623) 888-6190
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