Free Business Valuation Calculator
Know your worth. Estimate the market value of a business using standard industry multipliers based on SDE or EBITDA earnings. Perfect for exit planning and acquisitions.
Last Updated: 15 Jan 2026
Financials (Last 12 Months)
Net Profit + Owner Salary + Personal Expenses + One-time Costs.
Value your business
Enter earnings to see market estimates
Understanding Business Valuation: The Multiple Method
Most small businesses sell for a multiple of their earnings. For owner-operated main street businesses, this is typically 2.0x to 4.0x SDE (Seller Discretionary Earnings). For larger, more independent companies, it is often 3.0x to 6.0x EBITDA or higher, depending on growth, industry, and business quality.
Understanding your business value is crucial for exit planning, raising capital, partnership buyouts, or simply knowing what your life's work is worth. This calculator provides a starting point based on industry standards.
SDE Method (Small Business)
Used for owner-operated businesses typically under $5M in revenue where the owner is essential to operations.
- Typical Multiples: 2.0x - 4.0x SDE
- Includes: Net profit + owner salary + personal expenses
- Best For: Main street businesses, service companies, retail
- Example: $200K SDE × 3.0 = $600K valuation
EBITDA Method (Larger Business)
Used for professionally managed businesses that can operate without the owner's daily involvement.
- Typical Multiples: 3.0x - 6.0x EBITDA
- Includes: Operating profit before interest, taxes, depreciation
- Best For: Tech companies, SaaS, manufacturing, larger operations
- Example: $500K EBITDA × 5.0 = $2.5M valuation
Factors That Increase Business Value
Financial Factors
- • Strong and growing revenue
- • High profit margins (20%+)
- • Consistent year-over-year growth
- • Strong cash flow
- • Low customer concentration
Operational Factors
- • Recurring revenue model (subscriptions)
- • Low owner dependency
- • Strong management team
- • Scalable business model
- • Competitive advantages
Industry Multiples Reference
| Industry | SDE Multiple | EBITDA Multiple |
|---|---|---|
| SaaS / Tech | N/A | 5x - 15x |
| Professional Services | 2.5x - 4.0x | 3x - 6x |
| Retail / E-commerce | 2.0x - 3.5x | 3x - 5x |
| Restaurants | 2.0x - 3.0x | 3x - 4x |
| Manufacturing | 2.5x - 4.0x | 4x - 7x |
Note: Multiples vary significantly based on business size, growth rate, profitability, and market conditions. These are general ranges.
When to Get a Professional Valuation
Consider Professional Valuation For:
- • Actual sale or acquisition
- • Partnership buyouts
- • Estate planning
- • Divorce proceedings
- • Raising capital
- • Legal disputes
This Calculator Is Good For:
- • Initial estimates
- • Exit planning
- • Understanding valuation concepts
- • Comparing to industry standards
- • Setting expectations
- • Educational purposes
Frequently Asked Questions
What is SDE (Seller Discretionary Earnings)?
SDE is the total financial benefit to one full-time owner-operator. It includes Net Profit + Owner's Salary + Personal Expenses run through the business + one-time expenses. Used for valuing small, owner-operated businesses typically under $5M revenue.
What is EBITDA?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of operating profitability for larger, professionally managed businesses that can run without the owner's daily involvement.
What multiples are used for business valuation?
Small businesses (SDE) typically sell for 2.0x - 4.0x SDE. Larger businesses (EBITDA) typically sell for 3.0x - 6.0x EBITDA, with high-growth tech companies commanding much higher multiples (8x-15x+).
How accurate is this calculator?
This tool provides a 'Rule of Thumb' estimate based on industry averages. Actual value depends on growth rate, customer concentration, recurring revenue, and market conditions. For a certified valuation, consult a professional appraiser.
When should I use SDE vs EBITDA?
Use SDE for owner-operated businesses (typically <$5M revenue) where the owner is essential. Use EBITDA for larger, managed businesses that operate independently of the owner.
What increases business value?
Value increases with: strong recurring revenue, high profit margins, consistent growth, low owner dependency, diverse customer base, and scalable operations.
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