Business Valuation Calculator

This calculator uses the earnings multiple method — by far the most common way small and medium-sized businesses are actually priced when they change hands. The core idea is simple: a business is worth some multiple of the yearly profit it generates for its owner. The calculator takes your annual profit (SDE or EBITDA), applies the typical multiple range for your industry, and then adjusts that multiple up or down based on two of the strongest value drivers in real transactions: revenue trend and owner dependency.

The formula behind the result is transparent:

• ✓Base multiple range — each industry has a typical SDE multiple band, drawn from published small-business transaction data (e.g. software 3.0–5.0×, personal services 1.8–2.8×, restaurants 1.5–2.5×).
• ✓Trend adjustment — growing revenue adds roughly +0.5× to the multiple; declining revenue subtracts about −0.5×. Buyers pay for the future, and the recent trend is their best evidence of it.
• ✓Owner-dependency adjustment — a business that runs without its owner earns up to +0.3×; one that stops the day the owner leaves loses about −0.3×, because the buyer is really buying a job, not a company.
• ✓Valuation range — your profit multiplied by the adjusted low and high multiples gives the range; the midpoint is the single most likely anchor for a negotiation.

Everything runs in your browser — nothing you enter is stored or transmitted. The output is an estimate to anchor your thinking, not a formal appraisal; the sections below explain exactly what it can and cannot tell you.

The profit figure you enter matters more than anything else in this calculation, so get it right:

Whichever you use, base it on a clean average of the last two to three years, not your single best year. Buyers and their accountants will recalculate it anyway — a defensible number now saves the deal later.

A dollar of profit is not worth the same in every industry, because buyers price the durability and transferability of that profit, not just its size:

• ✓Software / SaaS (3.0–5.0× SDE): recurring subscription revenue, high margins, and profits that transfer cleanly to a new owner command the highest multiples.
• ✓E-commerce (2.5–3.5×): scalable and location-independent, but exposed to platform risk (Amazon, ad costs) and competition.
• ✓Manufacturing (2.5–3.5×) and distribution (2.2–3.2×): tangible assets, long customer relationships, and switching costs support solid mid-range multiples.
• ✓Agencies and professional services (2.0–3.0×): profits often walk out the door with key people and client relationships, so buyers discount for that risk.
• ✓Restaurants, retail, personal services (1.5–2.8×): thin margins, high failure rates, local competition, and heavy owner involvement keep multiples at the low end.

These bands come from aggregated small-business sale data and broker rules of thumb. Within any industry, individual businesses sell above or below the band — which is exactly what the adjustment factors capture.

The calculator adjusts for the two biggest factors, but buyers weigh a longer list. Before you sell, each of these is a lever you can still pull:

• ✓Owner independence. Document processes, train a manager, and step out of daily operations. This is the single highest-return preparation a seller can make — often worth half a turn of multiple on its own.
• ✓Revenue quality. Recurring contracts beat repeat customers, which beat one-off sales. A customer base where no single client exceeds 10–15% of revenue removes the concentration discount.
• ✓Clean, verifiable books. Three years of tidy financial statements and tax returns that match. Every unexplained number in due diligence becomes a price reduction.
• ✓Growth story. A credible, documented path to more profit — new location, untapped channel, price increase headroom — lets a buyer pay for tomorrow, not just today.
• ✓Transferability. Assignable lease, transferable licenses and supplier agreements, key staff likely to stay. Anything that can't move to the buyer, they won't pay for.

Sellers who spend 12–24 months deliberately improving these factors before listing routinely sell for 20–50% more than those who list as-is. Our guide on how to sell a small business walks through that preparation step by step.

In practice, a serious sale process uses the multiple method as the anchor, the asset value as the floor, and — where a formal opinion is required — a DCF as the supporting document.

Honest limits, so you use the number correctly:

• ✓It can't verify your inputs. If the SDE you enter wouldn't survive a buyer's accountant, neither will the valuation.
• ✓It can't see deal structure. Seller financing, earn-outs, and asset-vs-share structure move the effective price as much as the headline number.
• ✓It can't price the strategic buyer. A competitor who gains your customer list or a buyer who removes duplicate costs may rationally pay well above any multiple.
• ✓The market decides. Ultimately your business is worth what a real buyer signs for. The range here tells you where that negotiation is likely to land — the negotiation itself is yours to run.

Use the calculator to sanity-check a broker's pitch, set a realistic asking price, or spot an overpriced listing as a buyer. For a transaction, back it up with a professional valuation and your own due diligence.