Baton Launches Zillow-Like Valuations for Small Businesses
Aiming to transform how small business owners understand and sell their companies.
1Zillow for Main Street
Baton has launched Business Profiles, providing free public valuations and competitive rankings for 2 million small businesses. Modeled after Zillow's approach to real estate, this platform aims to create transparency in the opaque small business market. The company, founded by ex-Zillow executive Chat Joglekar, sees lack of awareness as its main competitor rather than traditional brokers. With 41% of US small businesses owned by baby boomers, the timing targets a looming ownership transition wave.
2The $10 trillion challenge
Boomer-owned small businesses represent $10 trillion in assets and employ 25 million people, yet over half lack succession plans. McKinsey projects 6 million business transitions by 2035, worth $5 trillion in enterprise value. Currently, 92% of exiting small businesses simply close rather than sell. Baton positions itself against this inertia, seeking to convert closures into orderly transitions. The company's database incorporates revenue estimates, team size, customer satisfaction, and comparable sales data to generate valuations.
3Valuation mechanics
Baton's valuations use PPP loan data and public records rather than private financials initially. While less precise than formal appraisals, the company argues any number beats complete uncertainty. The system shows owners their business's worth and local competitive standing before any engagement. Zillow's Zestimate has a 7% error rate for unlisted properties, suggesting similar accuracy challenges. Baton has already facilitated hundreds of sales through its paid transaction services after initial free valuations.
4From awareness to action
The platform currently processes seven deals weekly, up from 100 total sales reported months earlier. Baton charges monthly retainers plus success fees for completed transactions. Early adopters have discovered unexpected buyer interest after seeing preliminary valuations. CEO Joglekar emphasizes that most owners lack basic valuation knowledge, calling it 'locked away' information critical for informed decisions about business futures.
5Data-driven market creation
Baton spent five years building what it calls America's most sophisticated small business valuation database. The public rollout aims to shift owner psychology toward viewing businesses as transferable assets. Unlike real estate's MLS, small business sales lack standardized comparables, making Baton's data aggregation unique. The company sees its role as equipping owners for conversations they're currently unprepared to have about business value.
6Accuracy tradeoffs
Initial valuations may approximate true worth within 20% accuracy, similar to Zillow's performance for unlisted homes. Baton acknowledges its numbers improve when owners claim listings and provide financials. The transparency strategy mirrors Zillow's playbook of sparking interest through free access to data. However, small businesses' heterogeneity makes valuation more complex than residential real estate appraisal.
7Demographic imperative
With only 10% of owners able to estimate their business value within 10% accuracy, Baton addresses a critical knowledge gap. McKinsey found just 30% of owners have exit plans, creating urgency as boomers retire. The platform specifically targets owners who would otherwise close rather than sell, reframing a demographic challenge as a $5 trillion market opportunity for orderly transitions.
8Transparency experiment
Business Profiles represents a bold test of whether public valuation data can transform small business succession. Like Zillow, Baton may face accuracy debates as more valuations become visible. The initiative could either revolutionize how owners perceive business value or reveal fundamental limitations in standardized small business appraisal. Either outcome will provide valuable insights into this underserved market.
Original article: Fortune | FORTUNE — Baton Launches Zillow-Like Valuations for Small Businesses