FinanceCalcs
Business Valuation Calculator
Calculate what your business is worth using five proven valuation methods — revenue multiples, EBITDA multiples, Seller's Discretionary Earnings (SDE), discounted cash flow (DCF), and asset-based valuation. Get a blended estimate and understand what drives each number.
Used by business owners, buyers, and advisors. Enter what you know and leave the rest blank — the calculator works with any combination of inputs.
Business Valuation Calculator
Methods used: 0 | Industry: --
Estimated Value: $0
- Valuation by method
"Price is what you pay. Value is what you get."
- Warren Buffett
How business valuation works
There is no single correct way to value a business — different methods produce different numbers, and a sophisticated buyer or seller uses multiple approaches to triangulate a fair range. This calculator runs up to five methods simultaneously and produces a blended estimate.
Multiple-based methods (revenue, EBITDA, SDE) are the most common for private company transactions. They work by multiplying a financial metric by an industry-standard multiple derived from comparable transactions. The multiple reflects risk, growth, margin quality, and buyer demand in that sector.
Discounted Cash Flow (DCF) values the business based on the present value of its projected future cash flows, discounted at a rate reflecting the investment's risk. More rigorous but sensitive to assumptions — small changes in growth rate or discount rate produce large valuation swings.
Asset-based valuation calculates value as total assets minus liabilities. Most relevant for asset-heavy businesses (real estate, manufacturing, holding companies) and as a floor value — a going-concern business with strong cash flows is almost always worth more than its net assets.
lightbulb Typical Multiples by Industry
| Industry | Revenue | EBITDA | SDE |
|---|---|---|---|
| SaaS / Software | 3–8× | 8–20× | 4–8× |
| E-Commerce | 0.5–2× | 3–8× | 2–4× |
| Professional Services | 0.5–1.5× | 4–8× | 2–4× |
| Manufacturing | 0.4–1.2× | 4–7× | 2–4× |
| Healthcare / Medical | 0.8–2× | 5–10× | 3–5× |
| Retail / Restaurant | 0.2–0.8× | 2–5× | 1.5–3× |
| Construction / Trades | 0.3–0.8× | 3–6× | 2–3.5× |
Multiples are midpoint ranges for profitable businesses in good condition. Distressed businesses, high customer concentration, or owner-dependent operations trade at the lower end or below these ranges.
Business Valuation FAQs
What is the most common method to value a small business?
For businesses with under $5M in revenue, SDE (Seller's Discretionary Earnings) multiplied by an industry multiple is the most common method. SDE captures the total economic benefit to a single owner-operator — EBITDA plus the owner's salary and personal expenses run through the business. SDE multiples typically range from 1.5× to 4× for main street businesses, and up to 6–8× for high-growth or recurring-revenue models.
What is EBITDA and why does it matter for valuation?
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is the primary metric for middle-market and larger business valuations because it approximates operating cash flow and normalizes for different capital structures and accounting methods. A buyer acquiring a business will finance it differently than the seller — EBITDA strips out those financing effects to show the underlying business performance.
What factors push the multiple higher or lower?
Factors that increase the multiple: recurring revenue or contracted revenue, strong growth trajectory, diversified customer base (no single customer over 10–15% of revenue), documented processes that don't depend on the owner, strong brand, proprietary technology or IP, and expanding margins. Factors that decrease it: customer concentration, owner dependency, declining revenue, thin margins, undocumented processes, and near-term lease or contract expirations.
How is DCF different from multiple-based valuation?
Multiple-based methods are market-derived — they reflect what comparable businesses actually sold for. DCF is intrinsic — it values the business based on its own projected cash flows independent of what the market is paying. DCF is theoretically more rigorous but highly sensitive to assumptions. In practice, most M&A transactions use multiple-based methods as the primary reference and DCF as a sanity check.
Valuation terminology
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization. The standard profitability metric for M&A valuations of businesses with $1M+ in earnings. Strips out financing costs and non-cash charges to show operating performance.
SDE (Seller's Discretionary Earnings)
The total economic benefit to a single owner-operator: EBITDA plus owner's compensation, benefits, and personal expenses run through the business. The standard metric for main street businesses and small companies where the owner is the primary employee.
EV/EBITDA Multiple
Enterprise Value divided by EBITDA. The most commonly cited multiple in M&A transactions. An EV/EBITDA of 6× means the buyer is paying six times the annual EBITDA for the business.
Discounted Cash Flow (DCF)
A valuation method that projects future cash flows and discounts them back to present value using a required rate of return. The discount rate reflects the riskiness of the business — higher risk businesses require a higher discount rate, which lowers the valuation.
Terminal Value
In DCF, the present value of all cash flows beyond the explicit projection period, captured as a perpetuity growing at the terminal growth rate. Terminal value typically represents 60–80% of total DCF value — small changes in terminal assumptions have an outsized effect.
Enterprise Value vs. Equity Value
Enterprise Value (EV) is the total value of the business — what a buyer pays for the whole enterprise including debt. Equity Value = EV minus net debt. When buying a business, the purchase price is usually the equity value; the acquirer assumes or pays off the debt separately.
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