Business Valuation Calculator
✦ Finance & MoneyUse this business valuation calculator to put four rough estimates of what a small business is worth side by side — an SDE multiple, an EBITDA multiple, a discounted cash flow and adjusted net assets — from your own figures. It is a way to see how much a company is worth under each method's assumptions, not an appraisal: the multiples and the discount rate are yours, and the page shows a named, dated reference range beside them.
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- ✓ Nothing you type is stored
- ✓ No sign-up required
- ✓ Formula and sources shown
The formula
Four valuation methods and the earnings bridge
\text{EBITDA} = \text{Net profit} + \text{Tax} + \text{Interest} + \text{D\&A} + \text{One-offs} \qquad \text{SDE} = \text{EBITDA} + \text{Owner pay} \\[4pt]
\text{Equity} = \text{Earnings} \times \text{Multiple} + \text{Cash} - \text{Debt} \qquad \text{EV}_{\text{DCF}} = \sum_{t=1}^{5} \frac{\text{FCF}_t}{(1+r)^t} + \frac{\text{FCF}_5 (1+g)}{(r-g)(1+r)^5} \\[4pt]
\text{Equity}_{\text{assets}} = \text{Assets at market value} - \text{All liabilities}Every result is a rough estimate. The earnings multiples and the discount rate are the reader's inputs — the defaults are placeholders — so each value is only as good as the multiple or rate behind it. The headline range is the lowest to the highest of the four methods' equity values; no margin is added to it. One-off income is deducted from earnings, one-off expenses added back.
Calculating it by hand
- Enter annual revenue, net profit and one working owner's salary and perks.
- Enter the SDE multiple, the EBITDA multiple and the discount rate you want to test; the hints show a dated reference range for context.
- Open Advanced to enter the add-backs (tax, interest, depreciation and amortisation, one-off items), cash and debt, assets and liabilities at market value, and a five-year free cash flow forecast.
- Read the four rough estimates and the range between them; pick a tab to make one method the headline.
- Open "View the valuation workings" for the earnings bridge and each method's arithmetic, or download the CSV.
Worked examples
An owner-run service company valued on SDE
Enter: net profit $160,000; owner's salary and perks $110,000; SDE multiple 2.75. Advanced: depreciation and amortisation $25,000, one-off expenses $15,000, income tax $0, interest $0, cash $50,000, interest-bearing debt $50,000.SDE = $160,000 + $110,000 + $25,000 + $15,000 = $310,000.Enterprise value = $310,000 × 2.75 = $852,500.Equity value = $852,500 + $50,000 cash − $50,000 debt = $852,500.
SDE $310,000 · SDE-multiple value $852,500 (a rough estimate at your 2.75× multiple)
A growing business valued by discounted cash flow
Advanced: free cash flow $200,000, $250,000, $310,000, $380,000, $450,000; after year 5 grows forever at 3%; discount rate 12%; cash $150,000; debt $200,000.PV of years 1–5 = 200,000/1.12 + 250,000/1.12² + 310,000/1.12³ + 380,000/1.12⁴ + 450,000/1.12⁵ = $1,095,361.Terminal value = $450,000 × 1.03 ÷ (0.12 − 0.03) = $5,150,000; today = $5,150,000 ÷ 1.12⁵ = $2,922,248.Enterprise value = $1,095,361 + $2,922,248 = $4,017,609; equity = $4,017,609 + $150,000 − $200,000 = $3,967,609.
DCF equity value $3,967,609 — 73% of it from the terminal value
An asset-heavy distributor valued on adjusted net assets
Book assets of $2,100,000, revalued: +$450,000 for property and equipment at market value, −$80,000 for obsolete stock = $2,470,000. Enter that as tangible assets at market value; intangible assets $0.Liabilities: total liabilities $920,000; unrecorded liabilities $50,000 (a clean-up obligation).Adjusted net assets = $2,470,000 − ($920,000 + $50,000) = $1,500,000.
Adjusted net asset value $1,500,000
Methodology
How a small business is valued
A valuation is a range of opinions, each resting on one assumption — a multiple, a discount rate, a market value for the assets. Change the assumption and the number moves; that is why this page shows four and states every input.
Read sources and limitsWhat does a business valuation calculator do?
A business valuation calculator turns a company's profit, cash flow and balance sheet into an estimate of what the owner's equity might be worth, using the standard approaches: earnings multiples (market approach), discounted cash flow (income approach) and adjusted net assets (asset approach).
This one shows all four as rough estimates from your own figures and multiples, with the range between them as the headline.
At the page defaults — $1,200,000 of revenue, $180,000 of net profit, $120,000 of owner pay, and the add-backs under Advanced — EBITDA is $270,000 and SDE is $390,000. With the placeholder multiples of 2.50× SDE and 3.50× EBITDA, a 20% discount rate on a $150,000–$170,000 cash-flow forecast, and $480,000 of net assets, the four equity values run from $480,000 to $925,000.
What is SDE and how do you calculate it?
Seller's discretionary earnings (SDE) is the total yearly benefit one owner-operator takes from the business. Start from net profit and add back income tax, interest, depreciation and amortisation, one-off expenses and the owner's own salary and perks; deduct one-off or non-operating income. EBITDA is the same bridge without the owner's pay, because a larger company has to pay a manager.
At the defaults: $180,000 + $40,000 tax + $15,000 interest + $25,000 D&A + $10,000 one-offs = $270,000 EBITDA, plus $120,000 owner pay = $390,000 SDE.
Only one owner's pay is added back; a second working owner's salary is a real cost a buyer would have to replace.
How much is a business worth as a multiple of SDE or EBITDA?
There is no single multiple. It depends on the industry, size, growth, how much the business depends on its owner, and the terms of the deal — so this page does not type one as a fact: the multiple you enter is your own assumption, shown beside a named and dated reference range.
For context, the BizBuySell Insight Report's closed small-business sales for full-year 2025 show average sale-price-to-cash-flow multiples (BizBuySell's cash flow is SDE) from 1.51× for routes to 4.73× for car washes, across subsectors with 20 or more sales; HVAC businesses averaged 2.80× and restaurants 2.26×. Those are averages of reported deals, not a valuation of yours.
Public-company multiples are a different market: Damodaran's January 2026 dataset (NYU Stern) puts US companies with positive EBITDA at 19.73× EV/EBITDA. A small private company does not trade at public-market multiples, so use them only as a reminder of the gap.
How does the discounted cash flow method work?
Discounted cash flow values the business at what its future cash is worth today. Enter five years of free cash flow — cash left after running costs, tax and reinvestment — and a discount rate, the yearly return a buyer would require for the risk.
Each year is divided by (1 + rate) raised to the year number; the years after year 5 are a terminal value, either growing forever at a steady rate (Gordon growth) or sold at a multiple of year-5 cash flow.
At the defaults the five years are worth $473,122 today and the terminal value another $400,155, an enterprise value of $873,278; plus $50,000 cash and less $100,000 debt gives $823,278 of equity. Nearly half the value is in the terminal value, which is why a small change in the discount rate or the long-run growth rate moves the result a long way.
When is the asset-based value the right one?
The adjusted net asset method revalues every asset at what it would fetch today, adds identifiable intangibles, and deducts every liability, including ones not on the books. It suits holding companies, asset-heavy firms and businesses that earn little; for a profitable going concern it usually sets the floor, because earnings power is worth more than the assets alone.
At the defaults, $650,000 of tangible and $50,000 of intangible assets less $220,000 of liabilities is $480,000. If liabilities exceed assets, the page says so rather than showing a value of zero.
What can't a business valuation calculator tell you?
It does not know your industry, your customers or your books, and it cannot weigh what a professional appraiser weighs. Use these figures to understand the methods and test your assumptions, not as a price: a sale, a loan, a buy-out, a divorce or a tax filing needs a credentialed appraiser's signed report.
That appraiser follows the AICPA's Statement on Standards for Valuation Services (SSVS No. 1) or USPAP and considers the factors in IRS Revenue Ruling 59-60 — among them the nature and history of the business, the economic outlook, book value and financial condition, earning capacity, dividend capacity, goodwill, prior sales of the stock and the prices of comparable companies.
Business Valuation questions
How much is my small business worth?
There is no single answer: each method gives a different rough estimate from different assumptions. At this page's defaults — $390,000 of SDE, $270,000 of EBITDA, a five-year cash-flow forecast and $480,000 of net assets — the four methods run from $480,000 to $925,000. Change the multiples and the rate to your own and read the range, then talk to an appraiser for a figure you can rely on.
What is a typical SDE multiple for a small business?
It varies by industry and deal. In the BizBuySell Insight Report's closed sales for full-year 2025, average sale-price-to-cash-flow multiples ran from 1.51× (routes) to 4.73× (car washes) across subsectors with 20 or more sales; HVAC averaged 2.80× and restaurants 2.26×. Those are averages of reported deals, not your multiple.
What is the difference between SDE and EBITDA?
SDE adds back one owner's salary and perks; EBITDA does not. Both start from net profit and add back tax, interest, depreciation and amortisation and one-off items. At the defaults EBITDA is $270,000 and SDE is $390,000 — the $120,000 difference is the owner's pay. SDE is used for owner-run businesses, EBITDA where a buyer would pay a manager.
How do you calculate seller's discretionary earnings?
Net profit + income tax + interest + depreciation and amortisation + one-off expenses − one-off income + one owner's salary and perks. $180,000 + $40,000 + $15,000 + $25,000 + $10,000 + $120,000 = $390,000 at the page defaults. The earnings bridge under the calculator shows each step for your figures.
How does a discounted cash flow valuation work?
Each year's forecast free cash flow is divided by (1 + discount rate) to the power of the year, and the years after the forecast are valued as a terminal value. At a 20% rate the default forecast is worth $473,122 for five years plus $400,155 for the years after — $873,278 before cash and debt. The rate and the forecast are yours.
Can you value a business on revenue alone?
Only crudely. Two firms with the same revenue can earn very different profits, so this page values on earnings, cash flow and assets and shows revenue only as a cross-check: the default range of $480,000–$925,000 on $1,200,000 of revenue is 0.40× to 0.77× revenue. BizBuySell's 2025 averages ran from 0.27× (car dealerships) to 1.82× (software and app companies) revenue across subsectors with 20 or more sales.
When should a business be valued on its assets?
When it earns little, holds mostly property or investments, or may be wound up. Then the value is assets at market value less every liability. For a profitable going concern the asset value is usually the floor, because the earning power is worth more than the assets alone; at the defaults it is the lowest of the four, $480,000.
What does IRS Revenue Ruling 59-60 say about valuing a business?
Rev. Rul. 59-60 lists factors to weigh when valuing closely held stock, including the nature and history of the business, the economic and industry outlook, book value and financial condition, earning capacity, dividend-paying capacity, goodwill and other intangibles, prior sales of the stock and the market prices of comparable companies. It calls for judgment, not a formula.
Is an online business valuation calculator the same as an appraisal?
No. This page gives rough estimates from figures you enter. A formal appraisal, needed for a sale, a lender, a court or a tax filing, is done by a credentialed appraiser under AICPA SSVS No. 1 or USPAP, who examines the books, the market and the business itself and signs a report.
Source notes
Method, sources & limitations
Every figure on this page comes from the formula above applied to the values you enter. Nothing is estimated from market data, and no result is a forecast. These are the sources behind the method and any fixed figures it uses:
- IRS — Revenue Ruling 59-60 (valuation of closely held stock: the factors to weigh)
- U.S. Small Business Administration — Close or sell your business (valuing a business before a sale)
- BizBuySell Insight Report — closed small-business transaction metrics by sector, full-year 2025 (reference range only; cash flow = SDE)
- Damodaran Online, NYU Stern — EV/EBITDA by industry, US, January 2026 (public companies; contrast only)
Educational information only. Results are estimates produced from the assumptions you enter, and are not financial, tax, legal or medical advice. Check anything that matters against a qualified professional and the cited sources.