What Is My Business Worth?
Last reviewed: May 2026
A business valuation calculator estimates the market value of a business using standard valuation methods: revenue multiples, earnings multiples (EBITDA), discounted cash flow (DCF), and asset-based approaches. Valuation determines the price in acquisitions, the equity share in fundraising, the premium in insurance, and the basis for buy-sell agreements. While professional appraisals cost $5,000–$50,000, this calculator provides a defensible starting estimate using the same frameworks.1
| Method | Formula | Best For | Typical Multiple |
|---|---|---|---|
| Revenue Multiple | Annual Revenue × Multiple | High-growth, pre-profit businesses | 1–5× (SaaS: 5–15×) |
| EBITDA Multiple | EBITDA × Multiple | Profitable established businesses | 3–8× (varies by industry) |
| SDE Multiple | Seller's Discretionary Earnings × Multiple | Small businesses (owner-operated) | 2–4× |
| DCF | Sum of discounted future cash flows | Businesses with predictable cash flow | N/A (project-specific) |
| Asset-Based | Total Assets − Total Liabilities | Asset-heavy businesses, liquidation | N/A |
| Industry | Revenue Multiple | EBITDA Multiple |
|---|---|---|
| SaaS (high growth) | 8–15× | 20–40× |
| SaaS (mature) | 4–8× | 10–20× |
| E-commerce | 1–3× | 3–6× |
| Professional services | 1–2× | 4–8× |
| Manufacturing | 0.5–2× | 4–7× |
| Restaurants | 0.3–1× | 2–4× |
| Retail | 0.5–1.5× | 3–6× |
Premium factors: recurring/subscription revenue (+30–50%), high gross margins (70%+), strong growth rate (30%+ YoY), diversified customer base, proprietary technology or IP, and owner-independence. Discount factors: customer concentration (one client = 30%+ revenue), owner-dependency, declining revenue, thin margins, regulatory risk, and pending litigation. A SaaS business with 90% gross margins and 40% growth commands 10–15× revenue; the same revenue at 30% margins with 5% growth might fetch 2–3×.2
Seller's Discretionary Earnings (SDE) adds back the owner's salary, personal expenses, and one-time costs to net income — used for small businesses where the owner works in the business. EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) is used for larger businesses where management will be hired post-acquisition. If the business can't run without the owner, use SDE. If it has professional management, use EBITDA.3
Business valuation determines the economic worth of a company using established financial methodologies. The three primary approaches are the income approach (valuing the business based on its ability to generate future income), the market approach (comparing the business to similar companies that have recently sold), and the asset approach (valuing the net assets on the balance sheet). Each approach produces different results because they measure different aspects of value — the income approach captures future earning potential, the market approach reflects what buyers are actually paying, and the asset approach establishes a floor value based on tangible and identifiable intangible assets. Professional valuations typically use multiple methods and reconcile the results, weighting each approach based on the specific business characteristics and the purpose of the valuation.
| Industry | Revenue Multiple | EBITDA Multiple | SDE Multiple | Key Value Drivers |
|---|---|---|---|---|
| SaaS/Software | 3-10x | 10-20x | — | Recurring revenue, growth rate, churn |
| Professional Services | 0.5-1.5x | 4-8x | 2-4x | Client contracts, key personnel |
| E-commerce | 1-3x | 3-6x | 2.5-4x | Brand, supplier relationships, margins |
| Restaurants | 0.3-0.8x | 2-4x | 1.5-3x | Location, lease terms, concept |
| Manufacturing | 0.5-1.5x | 4-7x | 2.5-5x | Equipment, IP, customer concentration |
| Healthcare/Dental | 0.8-2x | 5-10x | 2-4x | Patient base, payer mix, facilities |
| Construction/Trades | 0.3-0.8x | 3-5x | 1.5-3x | Backlog, licensing, equipment |
For small businesses (typically under $5 million in revenue), Seller's Discretionary Earnings is the most commonly used earnings metric for valuation. SDE starts with net income and adds back the owner's salary, personal benefits charged to the business (health insurance, vehicle, cell phone, travel, meals), interest expense, depreciation, amortization, and any one-time or non-recurring expenses that will not continue under new ownership. The goal is to determine the total economic benefit available to a single owner-operator. A business with $200,000 in reported net income, a $150,000 owner salary, $30,000 in personal benefits, $20,000 in depreciation, and $15,000 in one-time legal fees has an SDE of $415,000. Applying an industry-appropriate multiple of 2.5x yields a valuation of approximately $1,037,500. The accuracy of SDE calculation depends entirely on clean financial records — businesses with incomplete bookkeeping, mixed personal and business expenses, or inconsistent reporting receive lower multiples because buyers perceive higher risk.
Beyond financial metrics, several qualitative factors significantly influence valuation multiples. Factors that increase value include recurring or subscription-based revenue (valued 2-3x higher than one-time revenue), diversified customer base (no single customer exceeding 10-15% of revenue), strong management team that operates independently of the owner, documented processes and systems, long-term contracts or exclusive agreements, proprietary technology or intellectual property, strong brand recognition, and favorable lease terms. Factors that decrease value include owner dependency (the business cannot operate without the current owner), customer concentration risk (one client represents 30%+ of revenue), declining revenue trends, industry headwinds, pending litigation, environmental liabilities, outdated equipment or technology, and key-person risk where critical knowledge resides in a single employee. Addressing value-destroying factors 2-3 years before a planned sale — a process called exit planning — can increase the sale price by 20-50%.
Professional business valuations cost $3,000-$25,000+ depending on complexity and are necessary in several situations: selling or buying a business, partner buyouts or disputes, divorce proceedings involving business ownership, estate and gift tax planning (IRS requires qualified appraisals for business interests exceeding $5,000), obtaining SBA loans or investor financing, buy-sell agreement funding, merging with another company, and shareholder litigation. Informal valuations using online calculators and industry multiples are adequate for preliminary planning, but any situation involving legal proceedings, tax reporting, or third-party transactions typically requires a Certified Business Appraiser (CBA) or Accredited Senior Appraiser (ASA) to produce a defensible valuation report. For related financial analysis, see our ROI Calculator and Profit Margin Calculator.
Selling a small business typically takes 6-12 months from listing to close and follows a structured process. The seller engages a business broker (who earns a commission of 8-12% on businesses under $1 million, or 5-10% on larger businesses) or prepares the sale independently. The broker creates a confidential business review (CBR) or offering memorandum documenting the business's financial performance, operations, growth opportunities, and asking price. Potential buyers sign non-disclosure agreements before receiving detailed financials. Interested buyers submit letters of intent (LOIs) outlining the proposed purchase price, terms, and conditions. Once an LOI is accepted, the buyer conducts due diligence — a thorough examination of financial records, legal documents, contracts, employee agreements, tax returns (typically 3-5 years), customer data, and operational processes. Purchase structures include asset sales (buyer acquires specific assets and liabilities — preferred by most buyers for tax and liability reasons) and stock sales (buyer acquires the entire entity including all assets and liabilities — preferred by most sellers for tax treatment). Financing typically involves a combination of buyer equity (10-30% down payment), SBA loans (up to $5 million), and seller financing (the seller carries a note for 10-30% of the purchase price, typically at 5-8% interest over 3-7 years). Seller financing demonstrates confidence in the business's continued viability and makes the sale more attractive to lenders and buyers.
→ Use multiple methods. Revenue multiples, earnings multiples, and DCF often give different numbers. The overlap is your most defensible range.
→ Clean up financials before valuing. Remove personal expenses, one-time costs, and normalize owner compensation to get accurate SDE/EBITDA.
→ Recurring revenue commands premium multiples. Converting one-time sales to subscriptions or retainers can dramatically increase valuation.
→ Reduce owner dependency. A business that runs without the owner is worth 30–50% more than one that can't.
See also: Profit Margin · Startup Runway · ROI Calculator · Break-Even
→ SDE vs EBITDA matters for small businesses. Seller's Discretionary Earnings (SDE) adds back the owner's salary and perks — used for businesses under $5M revenue where the owner is the operator. EBITDA is used for larger businesses with professional management. Using the wrong metric skews valuation by 30–50%.
→ Revenue multiples without context are meaningless. A 10× revenue multiple for a 90%-margin SaaS company is very different from 10× for a 5%-margin retailer. Always pair revenue multiples with margin analysis. Profit-based multiples (EBITDA) are more universal.
→ Recurring revenue commands premium multiples. A business with 80% monthly recurring revenue (subscriptions, contracts) is worth 2–4× more than one with the same profit from one-time sales. Predictable cash flow reduces buyer risk. See our ROI Calculator for investment analysis.
→ Owner dependency is the biggest value killer. If the business can't operate without the founder, buyers discount heavily (or walk away). Document processes, build a management team, and diversify client relationships before seeking a valuation. Use our Break-Even Calculator to stress-test scenarios.
See also: ROI Calculator · Break-Even Calculator · Profit Margin Calculator · Startup Runway