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Business Valuation Calculator

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Estimate a small business's value using the multiple method - one of the most common approaches for valuing small and mid-sized businesses.

Business Valuation Calculator

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Estimated business value
$500,000.00
Typical small business multiples range roughly 2-4x SDE; larger businesses using EBITDA often see higher multiples, both varying significantly by industry.

The formula

Estimated value = Earnings metric (SDE or EBITDA) x Industry multiple
Example

A business with $200,000 SDE and a 2.5x industry multiple: value = 200,000 x 2.5 = $500,000.

Step-by-step guide

  1. Choose SDE or EBITDA - SDE (Seller's Discretionary Earnings) is more common for small, owner-operated businesses; EBITDA is more common for larger businesses with a professional management team.
  2. Enter your annual earnings figure.
  3. Enter an appropriate industry multiple - research recent sales of comparable businesses in your specific industry for a realistic number.

SDE vs. EBITDA - which one applies to your business?

SDE adds back the owner's salary and personal benefits to net income, reflecting the total economic benefit available to a single owner-operator - it's the standard metric for most small businesses being sold to another individual buyer. EBITDA (earnings before interest, taxes, depreciation, and amortization) doesn't add back an owner's salary, since it assumes a business large enough to already employ a paid management team, which is more typical of mid-market or larger businesses, or those targeting institutional or private equity buyers.

Note: Multiple-based valuation is a widely used starting point, but real business valuations also weigh factors like growth trends, customer concentration, competitive position, and asset value. For an actual sale, purchase, or legal matter, a professional business appraiser or M&A advisor can provide a more complete valuation.

Common mistakes

Using a generic multiple instead of researching one specific to your industry - multiples vary enormously, from under 2x in some low-growth service industries to well over 10x for high-growth software businesses.
Using raw net income instead of SDE or EBITDA - both add back specific non-operating or owner-related expenses that raw net income doesn't reflect, which meaningfully changes the resulting valuation.

Frequently asked questions

Where do I find a realistic multiple for my industry?

Business brokers, M&A advisory firms, and industry-specific reports often publish typical multiple ranges by sector. A business broker familiar with recent comparable sales in your specific industry and region is usually the most reliable source.

Is this the only way to value a business?

No - other common methods include discounted cash flow analysis, asset-based valuation, and comparing recent sales of similar businesses directly. The multiple method shown here is popular for its simplicity, but a full valuation often considers multiple approaches together.

Does this account for business debt?

This calculates enterprise value based on earnings, not equity value. If the business carries significant debt, that would typically be subtracted from this figure to estimate the equity value an owner would actually walk away with.

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