What Is a Business Valuation Calculator?
A business valuation calculator estimates what a company is worth, most commonly by applying a multiple to its earnings or cash flow. Valuing a business is essential when buying, selling, raising investment, or planning succession. While professional valuations consider many factors, this calculator gives a useful starting estimate based on the earnings-multiple method that small-business buyers and sellers widely use.
How to Use the Calculator
- Enter the annual earnings — such as SDE (seller's discretionary earnings) or EBITDA.
- Enter an industry multiple appropriate to the business type.
- Calculate — see the estimated business value.
The Earnings Multiple Method
Business Value = Annual Earnings × Industry Multiple
For example, a business with $200,000 in SDE and an industry multiple of 3 is valued around $600,000. The multiple reflects risk, growth, and industry norms — higher for stable, growing businesses and lower for riskier ones.
Common Valuation Approaches
| Method | Basis |
|---|---|
| Earnings multiple | Profit (SDE or EBITDA) × a multiple |
| Discounted cash flow | Present value of future cash flows |
| Asset-based | Net value of assets minus liabilities |
| Market comparison | Sale prices of similar businesses |
What Affects the Multiple
- Growth and stability: growing, predictable businesses command higher multiples.
- Industry: different sectors have different typical ranges.
- Size: larger businesses often earn higher multiples.
- Owner dependence: a business that runs without the owner is worth more.
Note: This is an estimate. A formal valuation by a qualified professional considers many additional factors.
Frequently Asked Questions
How do you value a business?
A common method multiplies the business's annual earnings (such as SDE or EBITDA) by an industry-appropriate multiple. Other approaches include discounted cash flow and asset-based valuation.
What is SDE?
Seller's Discretionary Earnings is the profit available to a single owner-operator, adding back the owner's salary and certain non-essential expenses. It is widely used to value small businesses.
What is a typical business multiple?
Multiples vary by industry and size but often range from about 2 to 5 times SDE for small businesses, with higher multiples for larger, faster-growing companies.
What is the difference between SDE and EBITDA?
SDE adds back one owner's compensation and is used for small owner-operated businesses, while EBITDA does not add back owner pay and is used for larger companies with management teams.
Is this business valuation calculator free?
Yes — it is completely free, requires no signup, and gives a quick value estimate.