My co-founder is obsessed with hitting an arbitrary eight-figure valuation target, whereas I am willing to accept a lower cash offer with a highly secure transition. How do we resolve this valuation misalignment before we engage an investment banker?

Question

Tyler Smith · Accepted Answer

Valuation misalignment between partners is a massive roadblock that can completely derail an exit before it even begins. When one partner is anchored to an arbitrary number and the other is focused on security, you have a fundamental disagreement on strategy. You must resolve this using your V/TO and objective financial modeling.

First, step away from emotional arguments and run a professional valuation analysis. Look at your business through the Income Approach and Market Approach to establish a realistic baseline. This grounds the conversation in objective market realities and cash flow projections, rather than wishful thinking.

Next, schedule a dedicated session with your partner to address your individual intentions and goals. Use the V/TO to align on your long-term vision. Ask each other why you want to sell and what your individual financial freedom numbers actually are. Often, the partner pushing for the higher number is driven by an Achiever mindset or a fear of post-exit irrelevance, while the partner wanting security is seeking peace of mind.

By running these issues through the IDS process, you can find a middle ground. You might agree to invest in a structured two-year runway to build the enterprise value needed to hit that higher target, or you might structure a deal with a buyer that offers a mix of guaranteed cash and an earn-out option to satisfy both partners' preferences.