Estimate the fair market value of your business based on earnings and industry multiples.
1.5x – High Risk / Micro
2.0x – Main Street Service
2.5x – Standard Small Business
3.0x – Established/Growing
4.0x – High Margin / Tech
5.0x+ – Scalable Enterprise
Estimated Business Valuation
$0.00
How Is a Business Valued?
Valuing a small to medium-sized business typically relies on a method known as the Seller's Discretionary Earnings (SDE) method. This calculator uses the SDE approach, which is the standard for businesses with values under $5 million.
Understanding the Formula
Our calculator performs the following steps to reach your valuation:
Calculate EBITDA: Annual Revenue minus Operating Expenses.
Calculate SDE: EBITDA plus Owner's Salary and Benefits. This represents the total financial benefit available to a single owner-operator.
Apply Multiple: The SDE is multiplied by an industry-specific factor (the Multiple).
Add Assets: Finally, the value of saleable inventory and tangible equipment is added to the total.
Common Industry Multiples
Industry Type
Average Multiple
Retail & Mom-and-Pop Shops
1.5x – 2.5x
Professional Services (Accounting, Law)
2.0x – 3.5x
Manufacturing
3.0x – 4.5x
SaaS & Technology
4.0x – 7.0x
Valuation Example
Imagine a local landscaping company with $500,000 in revenue and $350,000 in expenses. The owner takes an $80,000 salary. The "Profit" shown on tax returns might only be $70,000, but the SDE is $150,000 ($70k profit + $80k salary).
If the industry multiple is 2.5x, the business is worth $375,000 (SDE × 2.5). If they also have $50,000 worth of trucks and equipment, the total valuation becomes $425,000.