Valuation in 2026: How CFOs Should Think About Multiples, Premiums, and Real Value Drivers
- Mohammad Kashif Javaid
- 5 days ago
- 5 min read
Not long ago, I sat with the founder of a surprisingly profitable services business in Dubai. He slid a piece of paper across the table with a valuation number written on it — a number he had pulled from “what similar companies sold for.
”I asked him one simple question:
“Do you know why those other companies received that multiple?”
He didn’t.
And he’s not alone.
In nearly every valuation discussion I’ve had — whether with a high-growth services company in the GCC, a PE-backed SaaS business in the US, or a design firm in London — the same misconception appears:
Most people treat valuation as multiplication, when in reality it is interpretation.
A multiple is not a number.
A multiple is a summary — of confidence, risk, strategy, customer behaviour, capital intensity, governance, and narrative clarity.
When CFOs understand this, valuation stops being a black box. It becomes something we can actively shape.
The Illusion of Industry Multiples
I’ve lost track of how many business owners tell me things like:
“Marketing agencies in the region go for 6× EBITDA.”
“SaaS is valued at 10× recurring revenue.”
“Construction companies normally trade at 4×.”
These statements are not wrong, but they are dangerously incomplete.
Industry multiples are post-fact observations — not guidance.
When you scrape beneath the surface, the spread within each industry is huge.
For example, in 2024–25:
“SaaS at 10× ARR” is actually a range from 4× to 18×
Oilfield service firms in the GCC ranged from 3× to 12× EBITDA
UK architecture firms traded anywhere from 5× to 11× (depending heavily on client concentration and backlog quality)
So what determines where a company sits in the range?
The real value drivers.
And CFOs must be able to articulate these drivers — with evidence — long before a buyer or investor asks.
Valuation Is a Narrative Informed by Numbers
The companies that receive premium valuations don’t simply “deserve” them — they explain them better.
This is particularly true for mid-market firms, where data is often messy and narrative discipline is weak.
Investors are not just buying current performance.
They’re pricing:
the future,
the volatility of that future, and
the credibility of management to deliver it.
I’ve seen two companies with nearly identical revenue and EBITDA end up with valuations 40% apart.
Why?
Because one explained their business better — how revenue repeats, how customers behave, how margins expand, how capital recycles, and how risk is mitigated.
A valuation without narrative is a number.
A valuation with narrative becomes a story investors want to join.
The Three Layers of Modern Valuation
From my work across the GCC, UK, and US, I’ve learned that every valuation — no matter how complex — rests on three layers.
1. The Financial Engine (the numbers)
This includes:
Revenue growth trends
Gross margin stability
EBITDA quality (adjusted, recurring, defensible)
Working capital discipline
Free cash flow conversion
Capex needs
But more importantly, the financial engine must be normalized.
For example, in one recent valuation project for a technology integration subsidiary in the GCC, we discovered that the client had a habit of expensing capital work.
Normalizing this alone changed EBITDA by more than 12%, and increased valuation by nearly a million dollars.
Numbers matter — but the right numbers matter more.
2. The Operating Engine (the machine behind the numbers)
Buyers look beyond financials and into operating DNA:
Customer concentration
Contract renewal behavior
Backlog stability
Delivery capacity
Network effects or switching costs
Dependency on key people
Pricing power
One of our clients in the UK — an engineering consultancy — was convinced their business would command a high multiple because of “strong revenue.
”But 58% came from two clients.
That instantly compresses multiples.
Contrast that with a US SaaS client of ours, where churn was below 4% and net revenue retention above 110%.
The multiple expanded naturally because the operating engine was predictable and sticky.
3. The Strategic Engine (the why-now story)
This is the layer most mid-market businesses ignore — and the one that drives premiums.
Premiums come from:
unique market timing,
clear expansion plans,
differentiated capability,
strong unit economics,
or structural advantages competitors cannot replicate.
When we re-built the valuation narrative for a services group in Qatar earlier this year, the strategic clarity doubled investor interest.
Not because the numbers changed — but because the future became believable.
Why Valuation Is Different in the GCC, UK, and US
This is a point many CFOs overlook: valuation cultures differ by region.
GCC
Relationships matter heavily
Investors look for stability and capital preservation
Multiples can be conservative unless recurring revenue is strong
Family businesses require clearer normalization
UK
Strong emphasis on governance, auditability, and documentation
Buyers expect predictable working capital cycles
Risk-adjusted multiples based on concentration and backlog quality
US
Growth and scalability narratives matter
Investors examine unit economics and lifetime value
Capital-light models receive premium
But volatility is penalized aggressively
Understanding these differences helps CFOs tailor the valuation story to the investor profile.
The Valuation Bridge — One of the CFO’s Greatest Tools
One technique I always use — and which I recommend every CFO adopt — is the valuation bridge.
A valuation bridge visually explains:
how we get from historical numbers
to adjusted numbers
to forward-looking value
to the final enterprise and equity value
It removes ambiguity.
It demonstrates professionalism.
And it signals to buyers that the CFO understands both the art and science of valuation.
I’ve seen negotiations shift dramatically once a buyer sees a clean, logical valuation bridge.
It builds trust instantly.
What Premium Businesses Do Differently
From all the deals I’ve supported, the best-performing companies share these qualities:
They know their numbers better than buyers do.
They understand what drives their valuation multiple.
They document their narrative properly.
They explain risks transparently.
They run professional working capital management.
They prepare early — months or years before exiting.
Premium valuation is not luck.
It is preparedness made visible.
Closing Thought: Valuation Doesn’t Just Measure Value — It Creates It
When a CFO builds valuation intelligence inside the organization, something powerful happens:
People start thinking like owners.
Managers start thinking in terms of returns, not costs.
Sales teams start thinking about customer concentration.
Delivery teams start thinking about margin durability.
Valuation becomes not a one-off exercise, but an operating philosophy.
And that is when value creation becomes part of the culture — not just the exit strategy.
Published by
✅ Strategic Finance Consultant ✅ ACS SYNERGY ✅ At ACS, we help growth seeking businesses with Finance Transformation, Accounting & Finance Operations, FP&A, Strategy, Valuation, & M&A 🌐 acssynergy.com
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