Business Valuation Report — Holloway Strachan & Reyes PLLC

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Business Valuation Report

Holloway Strachan & Reyes PLLC

Law Firm · TX · 18 years in business

Prepared: August 10, 2026 · Recipient: sample-partnership@valueai.pro · Partnership interest: 25%

Estimated Value of Your 25% Partnership Interest

$1,360,387 – $1,920,546

Midpoint: $1,600,455 · values shown are your 25% interest, not the whole firm

DCF Analysis · 40% weight $2,658,507

Market Multiples · 45% weight $742,000 – $1,187,200

Asset-Based · 15% weight $686,550

◆ Triangulated Value $1,600,455

The triangulated value is the weighted blend of the three methods above — it will typically sit below a strong DCF and above the conservative asset & goodwill anchor. DCF is shown as a point estimate; its sensitivity to the discount rate is quantified in the appendix. Weighting rationale in the appendix.

Basis of value. Values in this report are an estimate of fair market value of the owner's 25% interest in the operating business as a going concern, following the Main-Street transaction convention: the operating assets and goodwill transfer free of business debts. This analysis does not collect balance-sheet liabilities, cash, or receivables — those items, and the working capital that conveys, are negotiated in an actual transaction and are outside this estimate. The interest is valued on a strict pro-rata basis: no discount for lack of control or lack of marketability is applied. Actual transfers of minority interests frequently price below pro-rata value, and a partnership or operating agreement's buy-sell provisions may control the transfer price entirely — a credentialed appraiser should quantify those effects for any actual transfer. Effective date: financial data as submitted; market inputs as of report generation.

Valuation Factors

Three inputs directly affect your valuation multiples and discount rate. Each is shown below with its current status and exact impact on your result.

Key Person Dependency

▲ Moderate — the business depends meaningfully on the owner's involvement

Valuation Impact

−15% on multiples

The 15% discount is applied once within the market-multiples method (it is not re-applied to that method's result). The same risk is also priced in the DCF method as a +3.00% discount-rate premium — each method prices this risk within its own framework before the two are blended; see the Methodology note in the appendix. To put the multiples side in context: re-running the full valuation with low key-person dependency raises the multiples-method midpoint by approximately $129,850 (engine-computed, same method as the improvement table). To close this gap: document processes, cross-train staff, and build client relationships at the company level.

Customer Concentration

● Diversified — top customer 9%, top 3 24%

Valuation Impact

−2.7% on multiples

Classified diversified (top customer under 10%, top 3 under 30%). A small gradient adjustment of 2.7% still applies within the diversified band — the engine's concentration curve ramps continuously from 0% at full diversification to 3% at a 10% top customer (full schedule in appendix 6b) — so moving from 9% toward broader diversification recovers a modest amount of value. A diversified base supports stronger multiples and reduces transition risk for buyers.

Recurring Revenue

20% of revenue is recurring

Valuation Impact

+0.24x on multiples

Limited recurring revenue. Multiples increased by approximately $89,040 (+0.24x SDE) — a small base of repeat customers provides some stability, but most revenue requires re-winning each year. To grow this: convert one-time engagements into retainers or subscription arrangements where the underlying work is ongoing.

Key Financials

Entity-level and partner-level figures are labeled — the firm's totals and your 25% share are different scales and are never mixed within a single figure below.

Annual Revenue (entity)

$1,850,000

Net Profit (entity)

$640,000

SDE (Seller's Discretionary Earnings) — partner-level (your 25% profit share + your guaranteed payments)

$371,000

Your Guaranteed Payments

$160,000

Profit Margin (entity)

34.6%

Revenue Trend & Net Profit

Bars: revenue · Gold line: net profit (years provided)

Revenue trend chart shows entity-level figures; the valuation values in this report are your 25% interest.

Valuation Analysis

EXECUTIVE SUMMARY The value of your 25% interest in Holloway Strachan & Reyes PLLC is estimated to be between $1,360,387 and $1,920,546. This valuation range is derived from a triangulation of three methods: Discounted Cash Flow (DCF), Market Multiples, and Asset-Based Valuation. The business's steady revenue growth and diversified client base contribute to its valuation, while moderate key person dependency and the current level of recurring revenue present areas for improvement.

BUSINESS PROFILE & FINANCIAL HEALTH Holloway Strachan & Reyes PLLC has demonstrated consistent revenue growth, with a current annual revenue of $1,850,000 and a profitability margin of 34.6%. This margin indicates strong financial health compared to industry benchmarks. The firm's expenses are well-managed, with annual expenses totaling $1,210,000, resulting in a net profit of $640,000. The firm's financial stability is supported by its diversified client base, reducing the risk of revenue volatility.

VALUATION METHOD 1 — DCF ANALYSIS The DCF analysis values your 25% interest at $2,658,507, based on a 5.0% growth rate. This growth rate is a blend of the historical revenue CAGR of 4.9% and an industry base rate of 4.0%. The discount rate of 18.2% reflects company-specific risks, including a 3.0% key man risk and a 0.5% customer concentration risk, offset by a 0.4% reduction for recurring revenue. The present value of the terminal value is $1,339,853.

VALUATION METHOD 2 — MARKET MULTIPLES The market multiples approach yields a value range of $742,000 to $1,187,200 for your 25% interest, using a risk-adjusted SDE multiple range of 2.0x to 3.2x. These multiples account for the firm's revenue growth, key person risk, customer concentration, and recurring revenue. The adjusted range reflects the firm's position within the Law Firm industry, where multiples are influenced by practice area and client relationships.

VALUATION METHOD 3 — ASSET-BASED The asset-based valuation estimates your 25% interest at $686,550, comprising $18,750 in tangible assets and $667,800 in goodwill, calculated as 1.8x SDE. This method highlights the firm's intangible value, particularly its client relationships and reputation, which are critical in the legal industry.

INDUSTRY BENCHMARKS & COMPARISON Holloway Strachan & Reyes PLLC's current revenue growth of 4.9% and 20.0% recurring revenue fall short of the industry top-quartile targets of 10% growth and 30% recurring revenue. Key risks include client portability, moderate key-person dependency, and the absence of non-solicitation agreements. Value drivers include recurring retainer relationships and a diversified client base, which enhance the firm's attractiveness to potential buyers.

GROWTH SCENARIOS The DCF scenario values for industry median (4.0%), above-median trajectory (7.0%), and top-quartile target (10.0%) are $2,561,596, $2,862,166, and $3,193,567, respectively. Achieving the top-quartile scenario would require strategic initiatives to increase revenue growth to 10% and recurring revenue to 30%, enhancing the firm's market position and valuation.

STRATEGIC RECOMMENDATIONS

Increase recurring revenue to 30% by expanding retainer-based services, aligning with industry benchmarks.
Implement non-solicitation agreements to protect client relationships and reduce key-person dependency.
Focus on practice areas with higher multiples, such as corporate or estate planning, to enhance valuation.
Develop a documented succession plan to mitigate key-person risk and attract potential buyers.

BUYER PROFILE (a) Likely buyer archetypes: Potential buyers include other law firms seeking lateral partner buy-ins, legal platforms interested in expanding their geographic footprint, and junior associates looking for succession opportunities. (b) Why each archetype would buy this specific business: The firm's $1,850,000 revenue and $640,000 net profit, combined with its 18-year history and diversified client base, make it an attractive acquisition for firms looking to bolster their presence in Texas. (c) Realistic buyer pool size: Moderate, due to geographic and professional licensing constraints, but attractive to firms seeking strategic expansion. (d) What buyers will scrutinize hardest: Buyers will focus on the firm's client retention strategies, key-person dependency, lease terms, and the absence of non-solicitation agreements. (e) Deal structure & mechanics: This is a 25% partnership interest sale, typically structured as a multi-year payout via firm earnings. The buyer pool is often restricted to existing partners or approved laterals, with buy-sell provisions potentially controlling the transfer price. Minority interests often transact below pro-rata value due to marketability and lack-of-control reasons, though this report applies no such discount. (f) Industry M&A dynamics: The legal industry is experiencing consolidation through succession-driven tuck-ins and lateral partner acquisitions. Buyers compete on client relationships and practice area expertise, with a focus on expanding service offerings and geographic reach.

DCF — 5-Year Cash Flow Projections

Period	Projected SDE (owner cash flow)	Growth Rate	Present Value
Year 1	$389,550	5.0%	$329,569
Year 2	$409,028	5.0%	$292,764
Year 3	$429,479	5.0%	$260,069
Year 4	$450,953	5.0%	$231,026
Year 5	$473,500	5.0%	$205,226
Terminal Value (PV)	Gordon Growth Model @ 2.5% terminal growth		$1,339,853
Total DCF Value			$2,658,507

Growth rate: 5.0% | Discount rate: 18.2% (build-up method) | Projected cash flow is SDE — the pre-tax owner benefit (not capex/tax-adjusted free cash flow); see appendix section 3 for the full convention. Terminal value is 50% of the DCF total.

Discount Rate — Build-Up Method

Risk-free rate (10-yr U.S. Treasury)4.55%

Equity risk premium5.50%

Small company premium5.00%

▲ Key person dependency risk+3.00%

▲ Customer concentration risk+0.50%

● Recurring revenue reduces risk−0.40%

Total Discount Rate18.2%

Components shown at two decimals; the total is rounded to 0.1 pt and bounded 15%–40% — the rows sum to the total within that final rounding. Full component sources and schedules: appendix sections 2 and 6b.

Company-specific risk adds 3.1% to the base rate, directly reducing the DCF value. Addressing these factors before a sale would lower the discount rate and increase business value.

Market Multiples — Law Firm Benchmarks

Multiple Basis	Range	This Business	Value Range
Revenue Multiple (× your 25% revenue share)	0.49x – 1.06x	$462,500	$226,625 – $490,250
SDE Multiple (Primary) (× your partner-level SDE)	2x – 3.2x	$371,000	$742,000 – $1,187,200

Industry: Law Firm | Multiples shown are the final risk-adjusted ranges (full adjustment path in appendix section 4)

Asset-Based Valuation Breakdown

Equipment & FF&E (your 25% share)

$18,750

Goodwill (1.8x SDE)

$667,800

Total Asset Value

$686,550

DCF Sensitivity — Growth Rate Scenarios

How to read this chart. These are DCF-method values under three growth assumptions, NOT the headline triangulated valuation of $1,600,455 shown above. The triangulated value blends DCF (40% weight), Market Multiples (45%), and Asset-Based (15%) — so DCF alone typically runs higher than triangulated for profitable businesses. Use this chart to see how growth-rate changes affect the DCF component.

Growth rates anchored to Law Firm industry benchmarks. The "24-month target" is when a top-quartile peer would achieve the growth rate; the 5-year DCF then projects that growth rate sustained over the projection horizon (with a terminal-value tail). The top-quartile target matches the "Reach top-quartile growth" recommendation in the Valuation Scenario Planner below.

All DCF values shown are already pro-rated to your 25% partnership interest — they are NOT the whole-firm DCF that you would multiply by 25%.

Industry median $2,561,596

Maintaining typical industry growth pace (4.0% annual growth, yr5 revenue — your 25% share: $562,702)

Above-median trajectory $2,862,166

Operational improvements lifting growth above the industry median (7.0% annual growth, yr5 revenue — your 25% share: $648,680)

Top-quartile (24-month target) $3,193,567

Reaching top-quartile peer performance through targeted improvements (10.0% annual growth, yr5 revenue — your 25% share: $744,861)

Adjusted Valuation

—

Interactive Tool

Valuation Scenario Planner

Adjust the controls below to model both improvements and risks — like taking on a large new client that would raise concentration. Each control's row shows the dollar impact of the move: green for gains, red for costs.

Adjusted Valuation

← adjust controls below to see impact

Revenue Growth Rate

—

current

-25%0%+25%+50%+75%+100%

Modeled annual growth used in DCF projections.

Key Person Dependency

—

Customer Concentration

— Diversified

Top customer % of revenue

0% — Diversified

current

0%15%30%45%60%

Top 3 customers combined %

0% — Diversified

current

0%25%50%75%100%

Recurring Revenue %

—

current

0%25%50%75%100%

Your highest-ROI improvements, ranked

Targets reflect conservative top-quartile achievement for Law Firm businesses over a typical 24-month advisor-led plan. Sourced from public industry research (Thomson Reuters 2025 mid-market law firm survey + Clio 2025 Legal Trends Report). Your specific situation may warrant different targets — discuss with your advisor.

Valuation Scenario

Top Improvement Opportunities

Engine-computed impact of each improvement applied one at a time from today's baseline of $1,600,455 — the same targets and engine as the interactive planner. Effects compound when combined, so the impacts do not simply add.

#	Action	Est. Impact
1	Reduce key person dependency to Low	+$315,135
2	Reach top-quartile Law Firm growth (10%)	+$214,024
3	Reach top-quartile Law Firm recurring revenue (30%)	+$47,399

Use the interactive Valuation Scenario Planner at https://valueai.pro/sample-report/partnership to model specific scenarios in real time.

Appendix

Methodology & Calculations

All figures derived from data
provided at time of submission

How this valuation was produced. Every number in this report is computed by a deterministic financial engine using the formulas shown in this appendix — DCF, market multiples, and asset-based methods with explicit risk adjustments. AI is used only to write the narrative commentary; it does not calculate, adjust, or influence any valuation figure. The industry multiple table is maintained in-house, calibrated against BizBuySell-reported small-business transactions (~9,500 sales) and cross-checked against business-appraiser reference guides (conservative figure taken on disagreement); industry benchmarks cite their sources in the relevant sections. The risk-free rate is fetched live from Federal Reserve (FRED) data at generation. Every adjustment schedule the engine can apply is disclosed in full in section 6b.

1 · Seller's Discretionary Earnings (SDE)

SDE represents the total economic benefit available to a working owner-buyer. It normalizes owner compensation and adds back personal expenses run through the business so the valuation reflects true earning power regardless of how the owner chooses to pay themselves.

Annual Revenue	$1,850,000
Total Business Expenses	− $1,210,000
Net Profit (entity)	$640,000
Your 25% pro-rata share of net profit (× 0.25)	$160,000
Add back: Your guaranteed payments (deducted on Form 1065 — yours only, not other partners')	+ $160,000
Reported SDE (your 25% share of net profit + your guaranteed payments)	$320,000
Recurring Add-Backs (apply to all years)
Owner's health insurance through business	+ $18,000
Owner's retirement contributions	+ $25,000
Personal vehicle expenses	+ $8,000
Normalized SDE (used for valuation)	$371,000

Add-backs are personal/discretionary expenses run through the business that buyers add back when assessing true earning power. Recurring add-backs apply to historical years for trend analysis; one-time add-backs apply only to the current year so they don't distort the trend. Add-back amounts are as reported by the submitter; buyers typically require documentation for each add-back in diligence.

Owner-compensation basis. Owner pay is added back only when it was deducted as a business expense in arriving at net profit. For this partnership interest, your guaranteed payments are deducted on Form 1065, so they are added back; partner draws/distributions come out of the profit allocation and are never added back.

Partnership note: entity-level financials (net profit) are pro-rated to your 25% interest in the shaded row above. Your guaranteed payments and add-backs are partner-level as entered — they are yours alone and are not pro-rated. This assumes the entity's net profit is stated after all partners' compensation, so adding back only your own guaranteed payments does not double count. All SDE figures above are in partner-level dollars. Note: SDE at the partner level represents your pro-rata earnings claim plus your guaranteed payments — the cash actually distributable to you depends on the firm's distribution policy, which this analysis does not collect.

1b · Earnings History & Volatility

Buyers value earnings predictability. The 3-year SDE history below shows the consistency of earning power. Prior-year SDE applies the current year's owner compensation, recurring add-backs unchanged to prior years (consistency assumption — only prior-year net profit is collected); one-time add-backs apply only to the current year.

2 years ago — Normalized SDE	$346,000
1 year ago — Normalized SDE	$362,250
Current year — Recurring SDE (excludes one-time add-backs)	$371,000
Earnings consistency (coefficient of variation)	2.9% — stable

Earnings have been steady (CV under 10%) — no additional volatility risk premium is applied. Buyers value predictable earnings. CV = population standard deviation across the three years ÷ mean; the 10% threshold and the premium schedule (+0.1 point per CV point above 10%, capped +2 points) are fixed engine conventions.

2 · DCF Discount Rate — Build-Up Method

The discount rate represents the return a buyer would require to justify purchasing this business, given its risk profile. Calculated using the standard build-up method.

Risk-free rate (10-yr U.S. Treasury — FRED series DGS10)	4.55%
Equity risk premium	5.50%
Small company premium	5.00%
▲ Key person dependency risk (Moderate)	+3.00%
▲ Customer concentration risk (Diversified — top 9%, top 3 24%)	+0.50%
● Recurring revenue reduces risk (20% recurring)	−0.40%
Total Discount Rate	18.2%

Components are shown at two decimals and computed on unrounded values; the final rate is rounded to the nearest 0.1 point and bounded to a 15%–40% range — summing the rows reproduces the total exactly within that final rounding step. Sources: the risk-free rate is fetched at generation (10-yr U.S. Treasury constant-maturity yield). The 5.5% equity risk premium and 5.0% small-company premium are fixed engine conventions consistent with long-horizon U.S. historical equity-premium estimates and micro-cap/Main-Street size-premium studies used in build-up practice (Kroll/Duff & Phelps and Damodaran long-run figures cluster in these ranges); they are judgment-calibrated, not fetched from a live dataset. The schedules behind every company-specific line above (key person, concentration, tenure, volatility, recurring) are disclosed in full in section 6b below.

3 · Discounted Cash Flow (DCF) Valuation

Projects future earnings and discounts them to present value using the risk-adjusted discount rate. Growth rate: 5.0% | Terminal growth rate: 2.5% | Cash flows and DCF value reflect your 25% pro-rata share of entity earnings.

What is being discounted. The projected cash flow is SDE — the pre-tax total owner benefit — grown at the rate above. It is not tax-, capex-, or working-capital-adjusted free cash flow. Discounting the owner-benefit stream parallels the SDE-multiple convention used in the market method; it is a Main-Street convention, not a formal net-cash-flow-to-equity DCF, and is one reason the DCF figure typically runs above the market-multiples range. The triangulation weights (section 6) temper this: the DCF carries 40% of the blend.
Where the growth rate comes from. 75% weight on your historical revenue CAGR (4.9%) + 25% weight on the Law Firm base rate (4.0%), bounded to a −10%…+15% range and rounded to the nearest whole percent.
Terminal assumptions. The 2.5% terminal growth rate is a fixed convention approximating long-run U.S. inflation/GDP trend. The terminal value contributes 50% of the total DCF value. Projections use a 5-year horizon with year-end discounting.

Period	Projected SDE (owner cash flow)	Present Value
Year 1	$389,550	$329,569
Year 2	$409,028	$292,764
Year 3	$429,479	$260,069
Year 4	$450,953	$231,026
Year 5	$473,500	$205,226
Terminal Value (PV)	—	$1,339,853
DCF Value (25% interest)		$2,658,507

4 · Market Multiples Valuation

Applies transaction multiples for the Law Firm industry. The industry baseline is adjusted step by step below — each row shows the adjustment applied AND the resulting range after that step, which is the engine's exact computation path (ranges are rounded to 0.1x after every step, so the staged ranges are authoritative; recomputing from the factors alone can differ by up to 0.1x per step).

Industry baseline SDE multiple range	2.0x – 3.5x
Industry baseline revenue multiple range (cross-check basis)	0.50x – 1.20x
Revenue trend adjustment (additive) — +0.12x (2.5 × 4.9% CAGR, capped ±0.5x)	→ 2.1x – 3.6x
Key person risk adjustment (multiplicative) — ×0.85 (−15%)	→ 1.8x – 3.1x
Customer concentration adjustment (multiplicative) — ×0.973 (−2.7%)	→ 1.8x – 3.0x
Recurring revenue premium (additive) — +0.24x (additive)	→ 2.0x – 3.2x
Final adjusted SDE multiple range	2.0x – 3.2x
SDE-based value range (final SDE multiple × your partner-level SDE of $371,000)	$742,000 – $1,187,200
Revenue-based cross-check (final revenue multiple 0.49x–1.06x × your 25% share of revenue, $462,500)	$226,625 – $490,250
Market Multiples Value (SDE-based, primary) (25% interest)	$742,000 – $1,187,200

SDE-based multiples are the primary basis for triangulation; the triangulation uses the midpoint of the final range. Revenue multiples follow the same multiplicative adjustments, with a recurring premium of +0.20x × recurring fraction (here +0.04x) capped at +0.20x and 0.01x per-step rounding, and are shown only as a cross-check. The adjustments above are applied once within this method — not re-applied to the value range shown.
Provenance: the industry multiple table is maintained in-house, calibrated against BizBuySell-reported small-business transactions (~9,500 sales across 100+ industries) and cross-checked against business-appraiser reference guides, taking the more conservative figure where sources disagree. Range endpoints represent the typical reported transaction range for the industry, not observed minimum/maximum, and are not stratified by deal size within the industry.
Partnership note: these multiples derive from whole-company sales. They are applied here to your partner-level SDE (your 25% share of entity profit plus your compensation) — a pro-rata convention consistent with the Basis of Value statement at the top of this report; no minority-interest discount is layered on.

5 · Asset & Goodwill Value (conservative cross-check)

A hybrid cross-check combining the tangible assets collected with a conservative, earnings-derived goodwill estimate. Because the goodwill line is derived from SDE, this is not a pure asset/cost approach: only the tangible portion ($18,750) would hold if earnings collapsed, while the goodwill component moves with earning power. It serves as the conservative anchor in the triangulation rather than a liquidation floor.

Equipment value (your 25% share of $75,000 entity value)	$18,750
Goodwill estimate (1.8x SDE)	$667,800
Asset & Goodwill Value (25% interest)	$686,550

Scope: this method includes only the asset categories this analysis collects — equipment, inventory, real estate, and valued IP — plus the goodwill estimate. Cash, accounts receivable, work in progress, and liabilities are not collected and are excluded, consistent with the Basis of Value statement.

Goodwill multiplier calibrated against BizBuySell 2025 small business transaction data (~9,500 reported sales across 100+ industries). For Law Firm businesses, 1.8x SDE reflects typical residual goodwill after tangible assets are accounted for separately.

6 · Triangulated Valuation

The final valuation is a weighted average of the three methods, with weights reflecting the reliability of each method for this business profile.

DCF value	40% weight	$2,658,507
Market multiples midpoint	45% weight	$964,600
Asset & goodwill value	15% weight	$686,550
Triangulated Value (25% interest)		$1,600,455

Estimated range: $1,360,387 – $1,920,546 · All values reflect data as submitted. See disclaimer below.

Why these weights. Market multiples carry the largest weight (45%) because businesses of this size trade primarily on comparable-sale evidence — what buyers have actually paid for similar earnings. DCF (40%) is the forward-looking check: it rewards durable growth but is sensitive to projection assumptions, so it is not weighted first. The asset & goodwill method (15%) acts as the conservative anchor rather than a primary driver for a profitable operating business.

The weights are fixed conventions by business profile, not tuned per business: 40% / 45% / 15% (DCF / multiples / asset) for any business with positive SDE, shifting to 10% / 20% / 70% when SDE is zero or negative (an asset-reliant profile). They are a judgment convention reflecting how Main-Street businesses are actually priced; they are not derived from a dataset.

6b · Adjustment Schedules & Engine Conventions

The full schedule behind every adjustment the engine can apply — including levels that did not apply to this business — so any figure in this report can be traced to its rule. These schedules are fixed engine conventions, calibrated to the middle of appraiser-defensible ranges; they are applied identically to every report.

Factor	Effect on market multiples	Effect on DCF discount rate
Key person dependency	Low ×1.00 · Moderate ×0.85 (−15%) · High ×0.70 (−30%)	Low +0 · Moderate +3.0 pts · High +5.0 pts
Customer concentration (continuous curve on top-1 and top-3 %)	0% discount when fully diversified, ramping to −3% at top customer = 10%; −3% to −15% as top-1 runs 10→30% or top-3 runs 30→50% (larger of the two governs); −15% and steepening beyond; capped at −30%	Same curve shape at smaller magnitude: +0.5 pt at top-1 = 10%, +2.0 pts at 30%, capped at +5.0 pts; the computed premium is rounded to the nearest 0.1 pt before entering the build-up
Recurring revenue	+1.20x × recurring fraction on SDE multiples (50% recurring → +0.60x), capped +1.20x; revenue multiples +0.20x × fraction, capped +0.20x	−2.0 pts × recurring fraction (10% recurring → −0.2 pt), capped −2.0 pts
Revenue trend (CAGR)	±2.5 × CAGR on SDE multiples (e.g. +10% CAGR → +0.25x), capped ±0.5x; revenue multiples ±0.75 × CAGR, capped ±0.15x	— (trend affects the DCF via the growth rate instead)
Business tenure	— (tenure scales the goodwill estimate: ×0.6 at 2–4 years, ×0.2 under 2 years)	+3.0 pts under 3 years · +1.5 pts under 5 years · +0 at 5+
Earnings volatility	—	CV ≤ 10%: none · above 10%: +0.1 pt per CV point, capped +2.0 pts
Industry risk	— (already embedded in the industry baseline multiples)	+2.0 pts where the industry baseline SDE multiple floor is under 2.0x (higher-risk industries) · −1.0 pt where it exceeds 3.0x · bounded −2/+4 pts

Other conventions: Owner compensation is added back to net profit only when it was deducted as a business expense in arriving at net profit — W-2 salary (S-Corp/C-Corp) and partner guaranteed payments qualify; sole-proprietor draws, partner draws, and S-Corp shareholder distributions do not (they are already inside net profit) — the basis applied to this report is stated in section 1. DCF growth rate = 75% × historical revenue CAGR + 25% × industry base rate when history exists (industry base with tenure bonuses of +1 pt at 5 and 10 years otherwise), +2 pts when valued proprietary IP is present, bounded −10%…+15%, rounded to the nearest whole percent. Terminal growth fixed at 2.5%. Discount rate bounded 15%–40%, rounded to 0.1 pt. Multiples rounded to 0.1x (SDE) / 0.01x (revenue) after each adjustment stage. Real estate owned but not valued by the submitter is estimated at 60% of annual revenue and flagged as an estimate wherever shown. Triangulation weights: 40/45/15 (DCF/multiples/asset) with positive SDE; 10/20/70 otherwise. Reported range: −15%/+20% band around the triangulated midpoint (see Range & Sensitivity below).

Range & Sensitivity

How the range is set. The estimated range of $1,360,387 – $1,920,546 applies a fixed −15% / +20% band to the triangulated midpoint of $1,600,455. This band is a reporting convention — chosen to reflect the typical spread between preliminary estimates and realized Main-Street transaction outcomes — it is not computed from the scenario table below, and it is not a statistical confidence interval. The band gives more room to the upside because the midpoint is deliberately conservative: the multiples are calibrated to the conservative end of reported transaction ranges and the blend tempers the DCF, so competitive sale processes resolve above the midpoint more often than diligence resolves below it.

For orientation, assumption movements of roughly this magnitude would drive the value toward each end of the band (movements shown as internally consistent packages — the value-lowering case pairs slower growth with a higher discount rate and softer multiples):

Assumption	Base Case	Value-Lowering Case	Value-Raising Case
Growth rate	5.0%	2.0%	8.0%
Discount rate	18.2%	20.2% (higher rate = lower value)	16.2%
Market multiples	Risk-adjusted base	−5% contraction	+5% expansion

Discount-Rate Sensitivity

The company-specific premiums in the discount-rate build-up are professional judgment calls. This table shows what a two-point disagreement on the rate is worth — and why the triangulated value moves far less than the DCF alone (DCF carries 40% of the blend).

Discount rate	DCF value	Triangulated value
2 points lower (16.2%)	$3,054,972	$1,759,041
Base rate (18.2%)	$2,658,507	$1,600,455
2 points higher (20.2%)	$2,352,051	$1,477,873

The Discount-Rate Sensitivity table above is genuinely recomputed by the engine (same formula, same rounding) — it is the exact response to a ±2-point disagreement on the rate. The assumption table is illustrative orientation only. Risk adjustments for key person dependency and customer concentration are already embedded in the base-case multiples and discount rate; the band is not an additional risk adjustment.

Methodology note — how risk is priced across the two earnings methods. Measurable risks (key person, concentration, recurring revenue) are priced in both earnings methods, each within its own framework: as direct multiple adjustments in the market approach (the convention of transaction-multiple analysis, and visible to the reader), and as build-up premiums in the DCF discount rate (the convention of income-approach practice — the company-specific risk premium, CSRP). Because the two methods are then blended, each risk affects 85% of the triangulated weight through these two parallel channels; the schedules in section 6b were calibrated with that structure in mind, sized toward the conservative middle of appraiser-defensible ranges rather than stacked at full strength in both places. A formal USPAP-compliant appraisal would typically choose a single channel per method and document the CSRP judgment; the approaches differ in form but are calibrated toward similar total effects. Consult a credentialed appraiser (ABV, ASA, CVA, or equivalent) for any transaction, dispute, tax filing, or other situation requiring a defensible valuation.

Appendix

7 · Submitted Inputs

All inputs provided at the time of submission. These are the exact values used to generate this report. If any figure appears incorrect, contact support@valueai.pro to request a corrected report.

Business Overview
Business name	Holloway Strachan & Reyes PLLC
Industry	Law Firm
State / location	TX
Years in business	18 years
Number of employees	10
Business structure / entity type	Partnership / Multi-member LLC
Ownership interest	25%
Financials
Annual revenue	$1,850,000
Annual expenses	$1,210,000
Net profit	$640,000
Owner compensation (salary / draws / guaranteed payments)	$160,000 — deducted in expenses; added back in SDE
Owner add-backs (sum of recurring + one-time)	$51,000
Normalized SDE (used for valuation)	$371,000
Revenue history (2yr ago → 1yr ago → current)	$1,680,000 → $1,755,000 → $1,850,000
Revenue CAGR (calculated)	+4.9%
Net profit history (2yr ago → 1yr ago)	$540,000 → $605,000
Earnings volatility (CV)	2.9% (stable)
Risk Factors
Key person dependency	Moderate — the business depends on me for key decisions, relationships, or expertise
Customer concentration	top customer 9% of revenue; top 3 24%
Recurring revenue	20.0% of revenue
Assets & Property
Location ownership	Leasing
Lease years remaining	4 years
Equipment value	$75,000
Inventory value	—
Owns real estate	No
Intellectual property	No
Valuation Parameters
Risk-free rate used	4.55% (10-yr U.S. Treasury — FRED DGS10, fetched at generation)
Discount rate (calculated)	18.2%
Report generated	August 10, 2026

Disclaimer

This report is generated for informational and planning purposes only and does not constitute a formal business appraisal, financial advice, legal opinion, or tax advice. It is not a recommendation to buy, sell, or hold any business interest, security, insurance product, or other financial instrument. Valuations are based on the financial data provided by the submitter and publicly available industry benchmarks. Actual market value may vary based on due diligence findings, current market conditions, buyer/seller motivations, and factors not disclosed in this analysis. For any transaction, partnership dispute, tax filing, litigation, regulatory matter, or other situation requiring a defensible valuation, engage a credentialed business appraiser (ABV, ASA, CVA, or equivalent) or qualified attorney.