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: July 2, 2026 · Recipient: sample-partnership@valueai.pro · Partnership interest: 25%

Estimated Value of Your 25% Partnership Interest

$1,372,294 – $1,937,357

Midpoint: $1,614,464 · values shown are your 25% interest, not the whole firm

DCF Analysis · 40% weight $2,693,528

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

Asset-Based · 15% weight $686,550

◆ Triangulated Value $1,614,464

The triangulated value is the weighted blend of the three methods above — it will typically sit below a strong DCF and above the asset floor. Weighting rationale in the appendix.

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 already reflected in the multiples shown — your valuation is not separately reduced again. To put this in context: a comparable business with low key-person dependency would warrant approximately $170,224 more in the multiples-based estimate. To close this gap: document processes, cross-train staff, and build client relationships at the company level.

Customer Concentration

▲ Moderate — top customer 9%, top 3 24%

Valuation Impact

−3% on multiples

The 3% discount is already reflected in the multiples shown — your valuation is not separately reduced again. To put this in context: a comparable diversified business would warrant approximately $26,767 more in the multiples-based estimate. To recover this: diversify the customer base, formalize multi-year contracts with the largest customer, and develop pipeline depth in adjacent client segments.

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

Annual Revenue

$1,850,000

Net Profit

$640,000

SDE (Seller's Earnings)

$371,000

Owner Salary/Draw

$160,000

Profit Margin

34.6%

SDE Margin

20.1%

Revenue Trend & Net Profit

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

Valuation Analysis

EXECUTIVE SUMMARY The valuation range for Holloway Strachan & Reyes PLLC is $1,372,294 to $1,937,357, reflecting a triangulated approach that considers discounted cash flow (DCF), market multiples, and asset-based valuations. The firm's steady revenue growth and diversified client base position it within this range, with moderate key person dependency and a significant portion of recurring revenue contributing to its valuation.

BUSINESS PROFILE & FINANCIAL HEALTH Holloway Strachan & Reyes PLLC demonstrates a solid financial profile with an annual revenue of $1,850,000 and a net profit margin of 34.6%. The Seller's Discretionary Earnings (SDE) margin is approximately 20.1%, indicating efficient operations relative to industry benchmarks. The firm's revenue-to-expense ratio supports its profitability, though there is room to enhance recurring revenue to align with industry top-quartile standards.

VALUATION METHOD 1 — DCF ANALYSIS The DCF valuation of $2,693,528 is based on a 5.0% growth rate, reflecting the firm's historical performance. The 18.0% discount rate accounts for company-specific risks, including moderate key person dependency and diversified customer concentration. The terminal value of $1,368,682 was derived by projecting future cash flows and applying the discount rate, emphasizing the firm's potential for sustained growth.

VALUATION METHOD 2 — MARKET MULTIPLES The market multiples valuation range of $742,000 to $1,187,200 is based on a 2.0x to 3.2x SDE multiple, adjusted for key person risk and growth rate. This range reflects the firm's position in the law firm sector, where multiples are influenced by practice area and client retention. The firm's diversified client base and moderate growth support a mid-to-high range valuation.

VALUATION METHOD 3 — ASSET-BASED The asset-based valuation of $686,550 includes tangible assets valued at $18,750 and goodwill calculated at $667,800 (1.8x SDE). This method highlights the firm's intangible value, particularly its established client relationships and market presence, which are critical in the legal industry.

INDUSTRY BENCHMARKS & COMPARISON Compared to industry benchmarks, Holloway Strachan & Reyes PLLC's current growth rate of 4.9% and recurring revenue of 20.0% fall short of the 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. However, the firm's recurring retainer relationships and long-tenured staff are significant value drivers.

GROWTH SCENARIOS The growth scenarios project varying outcomes: Industry median (4.0% growth) at $2,595,067, Above-median trajectory (7.0% growth) at $2,900,460, and Top-quartile 24-month target (10.0% growth) at $3,237,237. To achieve the top-quartile scenario, the firm must enhance its recurring revenue streams and implement strategies to increase annual growth to 10%.

STRATEGIC RECOMMENDATIONS

Increase recurring revenue to 30% by expanding retainer-based services.
Implement non-solicitation agreements to protect client relationships.
Develop a succession plan to mitigate key person dependency.
Focus on practice areas with higher multiples, such as corporate or estate planning.

BUYER PROFILE (a) Likely buyer archetypes: Tuck-in acquisitions by other law firms expanding their practice area, PE-backed legal platforms targeting predictable annual fees, lateral partner teams seeking partnership equity, or junior associates in succession buyouts. (b) Why each archetype would buy this specific business: The firm's $1,850,000 revenue and $371,000 SDE make it attractive for expansion-focused firms or platforms seeking stable income streams. Its 18-year history in TX adds credibility and market presence. (c) Realistic buyer pool size: Moderate, due to geographic and professional licensing constraints, but expanded by the firm's diversified client base. (d) What buyers will scrutinize hardest: Client retention risks due to attorney-client relationships, the impact of key person dependency, and the absence of non-solicitation agreements. (e) Deal structure & mechanics: This is a sale of a 25% partnership/LLC interest, typically structured as multi-year payouts via firm earnings or remaining partners. Minority interests often trade at discounts of 20-35% due to marketability and lack-of-control factors, with the buyer pool restricted to existing partners and select pre-approved laterals. (f) Industry M&A dynamics: Current trends include PE roll-up activity and succession-driven tuck-ins, with firms competing on client retention and practice area specialization.

DCF — 5-Year Cash Flow Projections

Period	Projected FCF	Growth Rate	Present Value
Year 1	$389,550	5.0%	$330,127
Year 2	$409,028	5.0%	$293,757
Year 3	$429,479	5.0%	$261,394
Year 4	$450,953	5.0%	$232,596
Year 5	$473,500	5.0%	$206,971
Terminal Value (PV)	Gordon Growth Model @ 2.5% terminal growth		$1,368,682
Total DCF Value			$2,693,528

Growth rate: 5.0% | Discount rate: 18.0% (build-up method)

Discount Rate — Build-Up Method

Risk-free rate (T-bills)4.4%

Equity risk premium5.5%

Small company premium5.0%

▲ Key person dependency risk+3.0%

▲ Customer concentration risk+0.5%

● Recurring revenue reduces risk−0.4%

Total Discount Rate18.0%

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	0.49x – 1.06x	$1,850,000	$226,625 – $490,250
SDE Multiple (Primary)	2x – 3.2x	$371,000	$742,000 – $1,187,200

Industry: Law Firm | Typical buyers: Individual operators, local investors

Asset-Based Valuation Breakdown

Equipment & FF&E

$18,750

Inventory

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 $1,614,464 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 $2,595,067

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

Above-median trajectory $2,900,460

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

Top-quartile (24-month target) $3,237,237

Reaching top-quartile peer performance through targeted improvements (10.0% annual growth, yr5 revenue: $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

Estimated impact of each improvement starting from today's baseline of $1,614,464. Improvements are independent — combined impact would be higher.

#	Action	Est. Impact
1	Grow revenue by 25%	+$403,616
2	Reduce key person dependency to Low	+$284,905
3	Grow recurring revenue to 50%+	+$169,519

Use the interactive Valuation Scenario Planner at https://valueai.pro/report/67 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. Market multiples are calibrated against BizBuySell reported small-business transactions (~9,500 sales), applied through the industry profile that best matches this business; industry benchmarks cite their sources in the relevant sections. The risk-free rate is fetched live from Federal Reserve (FRED) data.

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	$640,000
Add back: Owner Compensation	+ $160,000
Reported SDE (net profit + owner compensation)	$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.

Partnership note: entity-level financials (net profit, rent normalization) have been pro-rated to your 25% interest. Owner compensation and add-backs are at the partner level as entered. All SDE figures above are in partner-level dollars.

1b · Earnings History & Volatility

Buyers value earnings predictability. The 3-year SDE history below shows the consistency of earning power. Recurring add-backs apply to all years (consistency assumption); 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.

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 Treasury)	4.4%
Equity risk premium	5.5%
Small company premium	5.0%
▲ Key person dependency risk (Moderate)	+3.0%
▲ Customer concentration risk (Diversified)	+0.5%
● Recurring revenue reduces risk (20% recurring)	−0.4%
Total Discount Rate	18.0%

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.

Period	Projected FCF	Present Value
Year 1	$389,550	$330,127
Year 2	$409,028	$293,757
Year 3	$429,479	$261,394
Year 4	$450,953	$232,596
Year 5	$473,500	$206,971
Terminal Value (PV)	—	$1,368,682
DCF Value (25% interest)		$2,693,528

4 · Market Multiples Valuation

Applies transaction multiples from comparable business sales in the Law Firm industry. The industry baseline is then adjusted for revenue trend, key person risk, customer concentration, and recurring revenue. Each adjustment compounds — the final adjusted multiple is what produces the value range below.

Industry baseline SDE multiple range	2.0x – 3.5x
Industry baseline revenue multiple range	0.50x – 1.20x
Key person risk adjustment (multiplicative)	×0.85 (−15%)
Customer concentration adjustment (multiplicative)	×0.97 (−3%)
Recurring revenue premium (additive)	+0.24x SDE
Final adjusted SDE multiple range	2.0x – 3.2x
SDE-based value range (final SDE multiple × $371,000)	$742,000 – $1,187,200
Revenue-based value range (final revenue multiple × $1,850,000)	$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; revenue-based multiples are shown as a cross-check. The risk adjustments above are already incorporated into the final multiple — they are not re-applied to the value range or to the triangulated valuation.

5 · Asset-Based Floor Value

Represents the minimum value of the business based on tangible and estimated intangible assets. Typically used as a floor — the business should be worth at least this even if earnings are minimal.

Equipment value	$18,750
Goodwill estimate (1.8x SDE)	$667,800
Asset-Based Floor Value (25% interest)	$686,550

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	$2,693,528
Market multiples midpoint	45% weight	$964,600
Asset-based floor	15% weight	$686,550
Triangulated Value (25% interest)		$1,614,464

Estimated range: $1,372,294 – $1,937,357 · 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-based method (15%) acts as a value floor rather than a primary driver for a profitable operating business.

Range Sensitivity Summary

The estimated range of $1,372,294 – $1,937,357 is derived from the triangulated midpoint of $1,614,464 by stress-testing key assumptions across plausible scenarios:

Assumption	Base Case	Low Case	High Case
Growth rate	5.0%	2.0%	8.0%
Discount rate	18.0%	16.0%	20.0%
Market multiples	Risk-adjusted base	−5% contraction	+5% expansion

This produces an asymmetric band of −15% to +20% around the midpoint — standard practice reflecting that downside scenarios (tighter credit, slower growth, buyer discounting) tend to compress value more than upside scenarios expand it. Risk adjustments for key person dependency and customer concentration are already embedded in the base case multiples and discount rate above.

Methodology note. Risk-factor adjustments shown above are applied as direct multiplier reductions for transparency, so the impact of each factor is visible to the reader. A formal USPAP-compliant business appraisal would typically incorporate these risks via the company-specific risk premium (CSRP) within the discount-rate build-up rather than as a separate flat-multiple discount. The valuation effects converge to similar magnitudes, but the underlying methodologies differ. 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
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	4.4% (live — Federal Reserve)
Discount rate (calculated)	18.0%
Report generated	July 2, 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.