Estimate Your Business Value
Enter your business financials below to estimate value using four common methods. Results update automatically as you type.
Quick-fill industry multiples:
Business Financials
Valuation Multiples & Rates
DCF Parameters
Understanding the Four Valuation Methods
No single method perfectly captures business value. Using multiple approaches and comparing results gives a more reliable estimate.
1. SDE Multiple
SDE (Seller's Discretionary Earnings) is net income with the owner's salary, interest, depreciation, amortization, and one-time expenses added back. This represents the total financial benefit available to a single owner-operator.
Best for: Small businesses under $5M revenue where the owner is actively involved in operations.
2. EBITDA Multiple
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures operational profitability without the owner's salary added back. This assumes a professional manager would be hired to run the business.
Best for: Mid-market businesses ($5M+ revenue) with professional management in place.
3. Revenue Multiple
Revenue-based valuation is used when earnings are inconsistent or the business is growing rapidly. It is common for SaaS, subscription businesses, and early-stage companies that may not yet be profitable.
Best for: High-growth businesses, SaaS/subscription models, or pre-profit companies.
4. Discounted Cash Flow (DCF)
DCF projects future cash flows, discounts them to present value using a required rate of return, and adds a terminal value for cash flows beyond the projection period. It accounts for time value of money and expected growth.
Best for: Stable businesses with predictable cash flows and clear growth trajectories.
Common Industry Multiples
These are typical ranges observed in business transactions. Actual multiples depend on profitability, growth, customer concentration, competitive position, and many other factors.
| Industry | SDE Multiple | EBITDA Multiple | Revenue Multiple |
|---|---|---|---|
| SaaS / Software | 3.0x - 5.0x | 6x - 12x | 3x - 10x |
| E-commerce / Retail | 2.0x - 3.5x | 4x - 7x | 0.5x - 1.5x |
| Professional Services | 2.0x - 3.5x | 4x - 7x | 0.8x - 1.5x |
| Healthcare / Medical | 2.5x - 4.0x | 5x - 9x | 1.0x - 2.5x |
| Manufacturing | 2.5x - 4.0x | 4x - 7x | 0.4x - 0.8x |
| Restaurant / Food Service | 1.5x - 3.0x | 3x - 5x | 0.3x - 0.7x |
| Construction / Trades | 1.5x - 3.0x | 3x - 5x | 0.3x - 0.8x |
| Digital Agency / Marketing | 2.0x - 3.5x | 4x - 7x | 0.8x - 2.0x |
| Accounting / Bookkeeping | 2.0x - 3.0x | 4x - 6x | 1.0x - 1.5x |
| Insurance Agency | 2.5x - 4.0x | 5x - 8x | 1.5x - 2.5x |
Multiples are approximate ranges based on typical market transactions. Higher multiples within a range apply to businesses with strong growth, recurring revenue, diversified customer base, and scalable operations. Lower multiples apply to businesses with declining revenue, customer concentration risk, or heavy owner dependence.
Factors That Increase or Decrease Business Value
Factors That Increase Value
- Recurring revenue -- subscriptions, contracts, and repeat customers reduce risk
- Revenue growth -- consistent year-over-year growth signals a healthy business
- Diversified customer base -- no single customer accounts for more than 10-15% of revenue
- Strong margins -- higher profit margins indicate pricing power and efficiency
- Documented processes -- systems and SOPs that allow the business to run without the owner
- Experienced team -- a capable management team that stays post-sale
- Intellectual property -- patents, proprietary technology, or strong brand value
Factors That Decrease Value
- Owner dependence -- if the owner IS the business, value drops significantly
- Customer concentration -- heavy reliance on one or two clients is risky
- Declining revenue -- shrinking top line reduces both multiples and base earnings
- Industry headwinds -- sectors facing disruption or regulation see compressed multiples
- Deferred maintenance -- outdated equipment, technology debt, or deferred capex
- Litigation or compliance risk -- pending lawsuits or regulatory issues
How to Use This Calculator
Step 1: Enter Your Financials
Use your most recent full-year financial statements (income statement / P&L). Enter annual revenue, net income (after taxes), owner's total compensation, interest expense, depreciation and amortization, taxes paid, and any one-time expenses that would not recur for a new owner.
Step 2: Choose Your Multiples
Use the quick-select industry buttons to pre-fill typical multiples, or enter custom values. If you are unsure, start with the default values and refer to the industry multiples table below for guidance.
Step 3: Compare Methods
Review all four valuations side-by-side. If your business is small and owner-operated, the SDE method is most relevant. For larger businesses, focus on EBITDA. High-growth companies should weigh the revenue multiple and DCF more heavily. The estimated range gives you a realistic bracket for negotiation.
Frequently Asked Questions
What is business valuation?
Business valuation is the process of estimating the economic value of a business or company. It uses financial metrics like revenue, earnings, and cash flow combined with industry-specific multiples to arrive at a fair market value. Multiple methods are typically used and compared to produce a reliable range rather than a single definitive number.
What is the SDE valuation method?
SDE (Seller's Discretionary Earnings) is the most common method for valuing small businesses under $5M in revenue. SDE equals net income plus the owner's salary, benefits, interest, depreciation, amortization, and one-time expenses. This total is multiplied by an industry-specific multiple (typically 1.5x to 4x) to estimate business value.
What is the difference between SDE and EBITDA?
SDE includes the owner's salary and benefits added back to earnings, making it ideal for owner-operated small businesses where the buyer will also be the operator. EBITDA does not include owner compensation and is used for larger businesses with professional management, where the owner's role would be filled by a salaried executive.
What valuation multiple should I use?
Multiples vary by industry, business size, growth rate, profitability, and risk profile. Small businesses typically sell for 1.5x to 4x SDE, while mid-market businesses sell for 3x to 8x EBITDA. Revenue multiples range from 0.5x to 3x or more depending on the industry. Use the industry multiples table above as a starting point and adjust based on your business's specific strengths and weaknesses.
What is a DCF valuation?
DCF (Discounted Cash Flow) estimates business value based on projected future cash flows discounted back to their present value using a required rate of return. It includes a terminal value that captures the business's worth beyond the projection period. DCF is more forward-looking than multiple-based methods but is sensitive to assumptions about growth rates and discount rates.
How accurate are online business valuation calculators?
Online calculators provide rough estimates useful for initial planning, benchmarking, and understanding the general range of your business's worth. The actual sale price depends on many qualitative factors not captured here -- customer relationships, competitive advantages, market timing, buyer synergies, negotiation dynamics, and more. For a real transaction, engage a professional business appraiser or M&A advisor.
Does this calculator store my financial data?
No. All calculations run entirely in your browser. No financial data is sent to any server, and nothing is stored.
Privacy & Limitations
Privacy: This calculator runs entirely in your browser. No financial data -- including revenue, income, or valuation results -- is transmitted or stored anywhere.
Limitations: This tool provides rough estimates for educational and planning purposes only. Business valuation is complex and depends on qualitative factors not captured in a simple calculator. Results should not be used as a basis for transactions without professional advice. Consult a certified business appraiser, CPA, or M&A advisor for formal valuations.
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Business Valuation Calculator FAQ
What is business valuation?
Business valuation is the process of estimating the economic value of a business or company. It uses financial metrics like revenue, earnings, and cash flow combined with industry-specific multiples to arrive at a fair market value. Multiple methods are typically used and compared to get a reliable range.
What is the SDE valuation method?
SDE (Seller's Discretionary Earnings) is the most common method for valuing small businesses (under $5M revenue). SDE equals net income plus owner salary, benefits, interest, depreciation, amortization, and one-time expenses. The SDE is then multiplied by an industry-specific multiple (typically 1x-4x) to estimate business value.
What is the difference between SDE and EBITDA?
SDE includes the owner's salary and benefits added back to earnings, making it ideal for owner-operated small businesses. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) does not add back owner compensation and is used for larger businesses where professional management is in place and the owner's role could be replaced by a salaried manager.
What valuation multiple should I use?
Valuation multiples vary by industry, business size, growth rate, and risk. Small businesses typically sell for 1x-4x SDE, while mid-market businesses sell for 3x-8x EBITDA. Revenue multiples range from 0.5x to 3x+ depending on the industry. SaaS companies, for example, often command higher revenue multiples (3x-10x) due to recurring revenue.
What is a DCF valuation?
DCF (Discounted Cash Flow) estimates business value based on projected future cash flows, discounted back to present value using a required rate of return (discount rate). It accounts for the time value of money -- a dollar earned in the future is worth less than a dollar today. DCF also typically includes a terminal value representing the business value beyond the projection period.
How accurate are online business valuation calculators?
Online calculators provide rough estimates useful for initial planning and benchmarking. Actual business value depends on many qualitative factors not captured in a simple calculator -- customer concentration, competitive advantages, market conditions, management team quality, intellectual property, and more. For a transaction, always engage a professional business appraiser or M&A advisor.
Does this calculator store my financial data?
No. All calculations run entirely in your browser. No financial data is sent to any server, and nothing is stored.