The prompt I use to value any business in under two minutes

Happy Tuesday!

Once you’ve found a business worth looking at, the next challenge is figuring out what it’s actually worth, and whether the asking price makes any sense.

This used to be the most time-consuming part of the evaluation process.

Running weighted cash flow calculations, determining the right multiple based on management structure, identifying red flags that would affect valuation.

Done manually, a thorough analysis could easily take 45 minutes to an hour per deal.

But with the right AI prompt, the same analysis takes about two minutes.

Today, I’m sharing it with you 👇

Jessica bought a $2.4M home healthcare agency and is projecting over $400K in profit in year one after joining Acquisition Ace.

She went from nurse practitioner to business owner with a business that’s already exceeding projections.

👉 Want priceless education and a community where everyone wants you to succeed? Book a call with our team here.

The prompt I use for business valuation

Here’s how I frame it:

“You’re an expert in small business valuation using my specific methodology. I’m analyzing a [business type] with these financials: [insert the actual numbers].

Key context: small businesses typically sell for 2 to 4x cash flow with the multiple determined by management structure and growth trends. Owner-operated businesses get 2 to 2.5x. Businesses with general managers get 3 to 4x.

I need you to:

1. Calculate weighted average cash flow over 3 years, giving 50% weight to the most recent year, 30% to the second year, and 20% to the third year.

2. Determine appropriate valuation multiple based on management structure and whether owner works in versus on the business.

3. Calculate fair market value range.

4. Recommend maximum offer price. I typically start 15 to 20% below fair value.

5. Identify red flags like customer concentration over 20%, declining cash flow trends, or heavy owner involvement that would lower the multiple.”

Why the weighted average matters

The three-year weighted calculation is particularly important and often overlooked.

It gives more weight to recent performance - which is what a bank will care most about - while still accounting for historical trends that might reveal whether the business is growing, plateauing, or quietly declining.

A business that made $400K last year but $600K the year before looks very different from one trending in the opposite direction, even if the simple average comes out the same.

(In Acquisition Ace, members learn how to apply frameworks like this before making any offer, so they’re not negotiating blind. To see how our community could help you close your first acquisition, book a call with our team here.)

What you actually get out of this

When I ran this type of analysis on an HVAC business I was looking at recently, the model:

• Calculated the weighted cash flow

• Applied a 3x multiple based on the existing management structure

• Identified the fair market value range

• Suggested a maximum offer price around 18% below asking

• And flagged seasonal revenue concentration as a risk factor worth investigating further

That entire analysis (done manually) would have taken close to an hour.

But when done through a well-constructed prompt, it took under two minutes and was more thorough than what I’d have produced rushing through it by hand.

What this changes for you

Most buyers make offers based on surface-level numbers or intuition.

When you understand the actual cash flow trajectory, what the management structure implies for risk and multiple, and where fair value actually sits, you make better offers.

You know when to walk away from something overpriced, or if you’ve found something genuinely worth pursuing.

And you can run this analysis across multiple businesses in the time it used to take to evaluate just one.

*One important note: AI handles the math, but you still need to verify the underlying numbers and understand what’s actually driving performance.

If you’d like to learn how to combine tools like this with the full deal evaluation and negotiation process, you’ll learn just that in the Acquisition Ace community, alongside 2,000+ members using these strategies on real deals.

To see if it’s right for you…

👉 Book a call with my team here.