How do you calculate the value of a business?

Business value is most commonly estimated using a multiple of earnings or revenue. For example, the EBITDA method multiplies your annual earnings before interest, taxes, depreciation, and amortization by an industry multiple (typically 2x to 6x for small businesses). Other popular methods include revenue multiples, seller's discretionary earnings (SDE), asset-based valuation, and discounted cash flow analysis. The right method depends on your industry, business size, and purpose of the valuation.

What is a typical EBITDA multiple for small businesses?

Most small businesses with annual EBITDA under $1 million sell for 2x to 4x EBITDA. Larger, more profitable, or fast-growing businesses can command 4x to 8x or higher. Multiples vary significantly by industry — SaaS businesses often sell for 5x to 15x revenue, while retail or food businesses may sell for 1x to 2.5x SDE. Buyers pay higher multiples for businesses with recurring revenue, strong margins, and low owner-dependence.

What is seller's discretionary earnings (SDE)?

SDE is the total financial benefit a single full-time owner receives from a business each year. It equals net profit plus the owner's salary, plus any personal expenses run through the business, plus one-time or non-recurring costs. SDE is the most common metric for valuing small businesses (under $5 million in value). A typical SDE multiple for small businesses ranges from 1.5x to 3.5x.

What is discounted cash flow (DCF) valuation?

DCF valuation estimates the present value of a business based on its expected future cash flows. You project free cash flow for 5 to 10 years, then discount those future amounts back to today's value using a discount rate (often 10% to 20% for small businesses). A terminal value is added to capture value beyond the projection period. DCF is most useful for businesses with stable, predictable cash flows.

How accurate is an online business valuation calculator?

An online business valuation tool gives you a solid starting estimate based on recognized valuation methods. It is accurate enough for initial planning, sale preparation, or rough benchmarking. For a formal valuation — such as for a bank loan, legal dispute, or actual sale — you should engage a certified business appraiser or M&A advisor who can account for factors like customer concentration, market conditions, lease terms, and staff retention.

Business Valuation Calculator – Estimate Company Worth Using EBITDA, Revenue Multiples, SDE & DCF

Business Valuation Calculator

Find out what your business is worth in seconds. Choose a valuation method, enter your numbers, and get an instant estimate of your company value — free, no sign-up needed.

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Instant results

Mobile friendly

Works worldwide

5 valuation methods

Trusted formula-based

Enter Your Business Details

Valuation Method

Annual EBITDA ($)

Earnings before interest, taxes, depreciation & amortization

EBITDA Multiple

Annual Revenue ($)

Total gross revenue / sales for the year

Revenue Multiple

Annual SDE ($)

Net profit + owner salary + add-backs + one-time costs

SDE Multiple

Total Business Assets ($)

Equipment, inventory, receivables, real estate, intangibles

Total Liabilities ($)

Loans, debts, accounts payable, obligations

Goodwill / Intangible Premium (%)

Added on top of net asset value to reflect goodwill

Annual Free Cash Flow ($)

Operating cash flow minus capital expenditures

Expected Annual Growth (%)

Realistic year-over-year cash flow growth rate

Discount Rate (%)

Projection Period (years)

Currency Symbol

Outstanding Debt to Subtract ($)

Optional — converts enterprise value to equity value

Your Business Valuation

Choose a valuation method, enter your financial details, and click Estimate Business Value to see results.

Estimated Business Value (EBITDA Method)

enterprise value

Low Mid High

Indicative valuation range based on method and multiples

Valuation Breakdown

Annual EBITDA —

Multiple Applied —

Enterprise Value —

Less: Outstanding Debt —

Equity Value (Est.) —

Low End Estimate —

High End Estimate —

Value Composition

Valuation by Method Comparison

How Business Valuation Works

A business valuation is an estimate of what a company is worth in the open market. Buyers and sellers use it to agree on a fair price. Lenders use it for loan decisions. Owners use it for retirement planning and exit strategies.

There is no single right answer. The true value of a business is whatever a ready buyer will pay and a willing seller will accept. But financial methods give you a solid starting point based on real numbers.

The most common methods are earnings-based (EBITDA or SDE multiples), revenue-based, asset-based, and discounted cash flow. Each method works better in different situations, which is why many valuations use two or more methods together for a range.

Which Valuation Method Should You Use?

EBITDA Multiple — Best for mid-size businesses with clear, consistent profit. Common in professional services, manufacturing, and distribution.
Revenue Multiple — Best for high-growth or early-stage companies where profit is low but revenue is strong. Common in SaaS and tech.
SDE Multiple — Best for owner-operated small businesses. Captures all owner benefit in one number.
Asset-Based — Best for asset-heavy businesses like real estate, equipment rentals, or companies being liquidated.
DCF — Best for businesses with stable, predictable cash flows. Gives the most detailed long-term picture.

Industry Valuation Multiples Reference

Industry	SDE Multiple	EBITDA Multiple	Revenue Multiple
Retail	1.5–2.5×	2–3×	0.2–0.5×
Restaurant / Food	1.5–2×	2–3×	0.25–0.5×
Landscaping / Trade	2–3×	2.5–4×	0.3–0.6×
Professional Services	2–3×	3–5×	0.5–1.5×
E-Commerce	2.5–4×	3–5×	0.5–1.5×
Manufacturing	2–3.5×	3–5×	0.5–1×
Healthcare / Medical	2.5–4×	4–6×	0.75–2×
SaaS / Software	N/A	5–15×	3–12×
Technology Services	3–5×	5–8×	1–3×

Ranges vary based on profitability, growth rate, market conditions, and deal size. Use as a guide only.

What Increases Business Value

Several factors push your business multiple up — meaning buyers will pay more per dollar of earnings:

Recurring revenue — Subscriptions, retainers, and repeat contracts reduce risk for buyers.
Strong growth trend — A business growing 20%+ per year commands higher multiples than one that is flat.
Low owner dependence — If the business runs without you, it is worth more. Document systems and processes.
Diversified customers — No single customer should be more than 15–20% of revenue.
Clean books — Clear, well-maintained financial records build buyer confidence.
Strong team — Experienced employees who will stay after the sale increase value.
Transferable contracts — Leases, supplier agreements, and customer contracts that transfer to the new owner.

Frequently Asked Questions

The most common formula is: Business Value = Earnings × Multiple. For EBITDA: take your annual EBITDA and multiply by your industry multiple (e.g., $300,000 EBITDA × 3× = $900,000). For SDE: take your seller's discretionary earnings and multiply by your multiple. The hard part is picking the right multiple — this tool uses common industry benchmarks to guide you.

Enterprise value is the total value of a business including all its debt. Equity value is what the owner actually takes home after paying off any loans. For example, if a business has an enterprise value of $1,000,000 and $200,000 in debt, the equity value is $800,000. Most buyers and sellers negotiate on equity value — the debt-free, cash-free price.

This calculator gives you a solid ballpark based on standard valuation methods. It is a great starting point for planning, benchmarking, and setting expectations. For an actual sale, purchase, loan, legal matter, or partnership dispute, you should work with a certified business valuator (CBV), M&A broker, or CPA who can factor in current market conditions, deal structure, customer contracts, and other specifics.

Each method captures a different aspect of value. A capital-intensive business with lots of equipment may value higher under asset-based. A subscription software company with low tangible assets may value far higher under revenue multiples. Using only one method can drastically under- or over-estimate value. Most experienced advisors use two or three methods together and then apply judgment to the results.

The biggest levers are: grow recurring revenue, reduce owner dependence, clean up your books, diversify your customer base, and lock in key employees. Even small improvements — like removing personal expenses from the business or adding a management layer — can meaningfully raise your multiple and push the final price much higher. Many owners start planning 12–24 months before a sale to maximize value.

EBITDA margins vary a lot by industry. In general, a 10–15% EBITDA margin is considered healthy for most small businesses. Service businesses can run 20–30%. SaaS companies can exceed 30–40%. Retail and food businesses are often under 10%. The margin itself affects your multiple — buyers pay more (per dollar of earnings) for high-margin, scalable businesses.

Business Value by EBITDA Amount & Multiple

Estimated enterprise value based on annual EBITDA. Highlighted cells show values at 3× multiple.

Annual EBITDA	2× Multiple	3× Multiple	4× Multiple	5× Multiple	6× Multiple	8× Multiple

Formula: EBITDA × Multiple. Currency shown as $. Actual multiples depend on industry, growth, and risk.

Business Value by Revenue Amount & Multiple

Estimated value using annual revenue and common revenue-based multiples.

Annual Revenue	0.5× Multiple	1× Multiple	2× Multiple	3× Multiple	5× Multiple	10× Multiple

Revenue multiples are common for SaaS, tech, and high-growth businesses. Revenue alone does not account for profitability — use alongside EBITDA method.

Small Business Value by SDE & Multiple

Seller's Discretionary Earnings (SDE) is the standard metric for small business sales under $5M.

Annual SDE	1.5× Multiple	2× Multiple	2.5× Multiple	3× Multiple	3.5× Multiple	4× Multiple

SDE = Net profit + owner salary + owner perks + one-time add-backs. Most small businesses sell for 2×–3.5× SDE.

Valuation Benchmarks by Industry Type

Common valuation ranges and key value drivers across major business categories.

Industry	Typical Multiple Range	Best Method	Key Value Driver	Risk Level
🛒 Retail (physical)	1.5–2.5× SDE	SDE	Location & inventory	Medium-High
🍕 Restaurant / Food	1.5–2× SDE	SDE / Revenue	Lease terms & traffic	High
🔧 Trade / Construction	2–3× SDE	SDE / EBITDA	Backlog & repeat contracts	Medium
🏥 Healthcare / Dental	2.5–4× EBITDA	EBITDA	Patient base & recurring visits	Low-Medium
⚖️ Legal / Accounting	1–2× Revenue	Revenue	Recurring retainer clients	Medium
🏭 Manufacturing	3–5× EBITDA	EBITDA / Asset	Equipment & proprietary process	Medium
🛒 E-Commerce	2.5–4× SDE	SDE / Revenue	Brand, traffic & margin	Medium
💻 SaaS / Software	5–15× Revenue	Revenue	MRR, churn, growth rate	Low-Medium
📱 App / Digital Product	2–5× Revenue	Revenue	Downloads, DAU, monetization	Medium
🏢 Commercial Real Estate	Cap Rate Based	Asset / DCF	NOI, occupancy, lease length	Low
🚗 Auto Dealership	0.1–0.2× Revenue	Revenue / Asset	Franchise agreement & floor plan	Medium
🌱 Franchises	2–3× SDE	SDE	Brand strength & territory	Low-Medium

Ranges are indicative only. Final multiples depend on deal size, market timing, buyer type, and business-specific factors. Verify with a qualified advisor.

Discount Rate Selection Guide (for DCF Valuation)

The discount rate reflects risk — the higher the risk, the higher the rate, and the lower the present value.

Discount Rate	Risk Profile	Typical Business Type	Present Value Factor (5 yr)
6–8%	Very Low	Established brand, dominant market position, predictable revenue	~0.68–0.74
10%	Low	Stable business, 5+ years history, strong margins	~0.62
12%	Moderate	Typical small-to-mid business, moderate competition	~0.57
15%	Medium-High	Newer business, owner-dependent, some customer concentration	~0.50
20%	High	Early stage, limited track record, high churn or competition	~0.40
25%	Very High	Pre-revenue startup, speculative model, no clear moat	~0.33
30%+	Speculative	Angel/VC stage, concept-only, high execution risk	~0.27

The present value factor shows the worth of $1 received in year 5 at each discount rate. Lower risk = higher present value of future cash flows.

DCF Valuation by Cash Flow & Growth Rate (at 12% Discount)

5-year present value of cash flows at a 12% discount rate. Includes a 3× terminal value multiple.

Annual Cash Flow	0% Growth	5% Growth	10% Growth	15% Growth	20% Growth

Formula: Sum of (CF × (1+g)^n / (1+r)^n) for n=1 to 5, plus terminal value = year 5 CF × 3. Currency: $.