When the Market Drops, Should You Bother With a Valuation?

Miranda Kishel
May 2
3 min read

Updated: May 29

In an economic downturn, many business owners instinctively hit pause on anything that feels optional—including getting a business valuation. After all, if revenues are down or uncertainty is high, what’s the point of valuing a business now?

But that instinct, while understandable, is often misguided. In fact, downturns are one of the most strategic times to get your business valued—if you know what to do with the information.

Why This Question Matters More Than Ever

Economic slowdowns tend to trigger a chain reaction:

Business owners delay growth plans.
Buyers start looking for “discounted” acquisitions.
Lenders tighten their requirements.
Investors get cautious.
Owners put off succession and exit planning.

In this climate, clarity is power. A valuation during a downturn offers that clarity. It helps you understand where your business truly stands—not just financially, but competitively and operationally.

The Benefits of Valuation in a Downturn

Valuing your business provides several key advantages during a downturn:

Negotiating Power: A solid valuation can strengthen your negotiating position when restructuring debt or discussing partnerships.
Informed Decision-Making: If you're preparing for mergers and acquisitions (M&A) activity, knowing your value can guide your strategy.
Insurance Insights: Evaluating your business can help you reassess insurance coverage or tax positions effectively.
Strategic Planning: Long-term strategies often require a deep understanding of your current position.

Valuation is not merely a snapshot of worth; it’s a roadmap for navigating challenging times.

What I’ve Seen as a Valuation Professional

From my experience working with hundreds of small business owners, here’s what I’ve learned:

📉 Your business may be more resilient than you think. A downturn might affect one segment of your business, while others hold steady—or even grow. Valuation analysis can uncover those strengths.

📈 Valuation is about more than numbers. It incorporates market positioning, customer loyalty, operational efficiency, and industry trends. Many businesses increase in relative value during downturns if competitors are struggling more.

🕵️ Lenders and buyers still need valuations. In fact, they become more important when the economic outlook is uncertain. Nobody wants to make a high-stakes decision based on guesswork.

🧠 Downturns offer insight into leadership. If your business can survive—or adapt—during a recession, that proves value in ways that a booming economy never could.

My Point of View: Valuations in Downturns Are Strategic Assets

A downturn doesn't make valuation irrelevant. It makes it different. The focus shifts from “how much could I sell for tomorrow?” to “what can I learn today to grow stronger tomorrow?”

In fact, many of the best business decisions I’ve seen—restructuring, strategic acquisitions, smart exits—started with a valuation during a tough market.

Here’s my position:

Getting a valuation in a downturn isn’t about selling. It’s about strategy. And if you're not looking at the numbers now, you're flying blind.

Practical Takeaway for Small Business Owners

If you’re unsure whether now is the right time for a business valuation, consider this checklist:

✅ Are you thinking about selling in the next 3–5 years?
✅ Are you navigating partner buyouts, loans, or estate planning?
✅ Do you want clarity on where to cut costs—or where to double down?
✅ Do you want to benchmark your business against peers or prepare for recovery?

If you answered yes to any of these, it’s time to stop waiting.

How to Get Started with Your Valuation

To begin the process, you can take these steps:

Identify Your Objectives: Understand what you want to achieve from the valuation. Is it for selling, planning, or assessing performance?
Gather Financial Records: Collect all relevant financial documents to provide a clear picture of your business’s health.
Consult a Professional: Seek experts who specialize in business valuations. They can guide you through the process and provide objective insights.
Monitor Market Trends: Stay informed about industry trends that may affect your valuation. Markets fluctuate, and an informed perspective is invaluable.

Conclusion

In conclusion, knowing your business's value in a downturn can be your best tool. It opens doors to better decision-making and strategic planning. Don't let uncertainty keep you from gaining critical insights into your business.

📘 Learn how we approach valuations with market-aware insight with Development Theory’s Business Valuation Services.