Which valuation method should I use?

Most small and mid-sized businesses are valued using a combination of methods. EBITDA and revenue multiples are common for profitable, going-concern businesses. DCF is useful when you have a clear forecast of future cash flows. Asset-based valuation is more relevant for asset-heavy or unprofitable businesses. The calculator shows all four so you can compare and use a blended range.

What multiple should I use for my business?

Multiples vary widely by industry, size, growth, and risk. A typical small business might sell for 3–6x EBITDA, but high-growth or recurring-revenue businesses can command higher multiples. Use industry reports, comparable transactions, or guidance from advisors to refine the default ranges. The calculator lets you set low, mid, and high multiples to see a valuation range.

What is the difference between EBITDA and SDE?

EBITDA is earnings before interest, taxes, depreciation, and amortization, and is commonly used for larger businesses. SDE (seller’s discretionary earnings) adds back the owner’s salary and certain discretionary expenses, and is often used for smaller, owner-operated businesses. This calculator focuses on EBITDA but you can use SDE in place of EBITDA if you also use SDE-based multiples.

Is this calculator suitable for startups?

Early-stage startups with negative earnings and limited history are usually valued using different frameworks (e.g., scorecard, venture capital method, or comparable funding rounds). You can still use the revenue multiple and DCF sections for directional insight, but results should be interpreted with caution and supplemented with startup-specific methods.

Business Valuation Calculator

Q: How accurate is this business valuation calculator?

The calculator provides educational estimates based on standard valuation methods such as EBITDA multiples, revenue multiples, discounted cash flow (DCF), and asset-based valuation. Accuracy depends on the quality of your inputs and the relevance of the multiples you choose. For transactions, tax, or legal purposes, you should consult a qualified valuation professional or CPA.

Estimate what your business might be worth using EBITDA multiples, revenue multiples, discounted cash flow (DCF), and asset-based valuation in one place.

Currency

Industry (optional)

Annual revenue

Last 12 months total revenue.

EBITDA

Earnings before interest, tax, depreciation & amortization.

Owner salary add-back (optional)

Use this if you want to approximate SDE-based valuation.

Normalized net profit (optional)

After adjusting for one-offs and owner perks.

Tangible assets (fair value)

Equipment, inventory, property, cash, etc.

Liabilities / debt

Loans, payables, and other obligations.

Valuation multiples

Set low, mid, and high multiples to see a valuation range. Adjust based on your industry, growth, and risk.

EBITDA multiple

Common: 3–6x

Low

Mid

High

Revenue multiple

Common: 0.5–3x

Low

Mid

High

Discounted cash flow (DCF) inputs

Optional: project free cash flow and discount rate to estimate intrinsic value.

Current annual free cash flow

Expected annual growth rate

Discount rate (required return)

Forecast period

Terminal growth rate

Estimated business value

These are illustrative estimates based on your inputs. Actual market value depends on negotiations, deal structure, and buyer appetite.

Overall valuation range

Median of all applicable methods, showing low–high range.

Quick snapshot

EBITDA multiple valuation

Market-based

Uses EBITDA (plus optional owner salary add-back) multiplied by your selected range of EBITDA multiples.

EBITDA used
Multiple range
Value range

Revenue multiple valuation

Market-based

Applies revenue multiples to your latest annual revenue.

Revenue used
Multiple range
Value range

Discounted cash flow (DCF)

Intrinsic value

Projects free cash flow over time and discounts it back to today.

PV of forecast cash flows
PV of terminal value
Total DCF value

Show yearly cash flows

Asset-based valuation

Balance sheet

Estimates equity value as assets minus liabilities.

Tangible assets
Liabilities
Net asset value

This tool is for educational and planning purposes only and does not constitute financial, tax, or legal advice.

How to use the business valuation calculator

This calculator lets you estimate what a business might be worth using four common valuation approaches: EBITDA multiples, revenue multiples, discounted cash flow (DCF), and asset-based valuation. It is designed for owners, buyers, and advisors who want a quick, structured starting point before engaging a professional.

1. Enter your financials

Annual revenue: Total sales over the last 12 months.
EBITDA: Earnings before interest, taxes, depreciation, and amortization.
Owner salary add-back: For small, owner-operated businesses, you can add back the owner’s salary and perks to approximate SDE (seller’s discretionary earnings).
Normalized net profit: Optional; net income after removing one-off or non-recurring items.
Tangible assets and liabilities: Use fair market values, not just book values, where possible.

2. Choose valuation multiples

Market-based methods apply a multiple to a financial metric. Typical ranges (very general, varies by industry):

EBITDA multiple: 3–6x for many small businesses; higher for larger, lower-risk, or high-growth companies.
Revenue multiple: 0.5–3x for many traditional businesses; higher for high-margin or recurring-revenue models.

Use industry reports, comparable sales, or broker guidance to refine the default ranges. The calculator shows low, mid, and high values so you can see a valuation band instead of a single point estimate.

3. Discounted cash flow (DCF) assumptions

The DCF method estimates intrinsic value by projecting future free cash flows and discounting them back to today:

DCF value = PV of forecast cash flows + PV of terminal value

Forecast cash flow in year t:

CF_t = CF₀ × (1 + g)^t

Present value of each year:

PV(CF_t) = CF_t / (1 + r)^t

Terminal value (Gordon growth model):

TV = CF_n+1 / (r − g_terminal)

Current annual free cash flow: Cash available to owners after operating expenses, taxes, and necessary reinvestment.
Growth rate: Expected annual growth in free cash flow during the forecast period.
Discount rate: Your required rate of return, often based on the business’s risk profile (e.g., 10–20% for small private companies).
Terminal growth rate: Long-term, stable growth after the forecast period (usually 0–3% in mature markets).

4. Asset-based valuation

Asset-based valuation is more relevant for asset-heavy or unprofitable businesses. It estimates equity value as:

Net asset value = Fair value of tangible assets − Total liabilities

Include equipment, inventory, property, cash, and other tangible assets at realistic market values. Exclude personal assets not part of the business.

Interpreting the results

The calculator shows a separate value from each method and an overall range based on the median of all applicable methods. In practice:

Use EBITDA and revenue multiples to see how the market might price your business.
Use DCF to understand intrinsic value based on your own expectations.
Use asset-based value as a floor for asset-heavy or distressed businesses.

No online tool can replace a full valuation report, but this calculator gives you a structured, transparent starting point for discussions with buyers, investors, or advisors.

Limitations and professional advice

This calculator does not account for deal structure (cash vs. earn-out), working capital adjustments, minority discounts, control premiums, or tax considerations. For transactions, estate planning, shareholder disputes, or regulatory filings, you should obtain a formal valuation from a qualified professional (e.g., CPA, CFA, or accredited valuation analyst).

Business valuation calculator – FAQs

How accurate is this business valuation calculator?

The calculator uses standard valuation frameworks and your inputs to generate a reasonable range, not a precise number. Accuracy depends on how realistic your financials, growth assumptions, and multiples are. Use it for planning and education, not as a substitute for a formal valuation or appraisal.

Which valuation method should I rely on most?

For most profitable, going-concern businesses, EBITDA multiples and DCF are often the primary reference points. Revenue multiples are useful for high-growth or recurring-revenue businesses. Asset-based valuation is more relevant when earnings are weak but asset value is significant. In practice, buyers look at several methods and negotiate within a range.

What multiple should I use for my industry?

Multiples vary by industry, size, growth, customer concentration, recurring revenue, and risk. Industry reports, broker listings, and comparable transactions are good reference points. If you are unsure, start with conservative multiples and adjust after speaking with an advisor who knows your sector.

Can I use this for startup valuation?

You can use the revenue multiple and DCF sections for directional insight, but early-stage startups are usually valued using different methods (scorecard, Berkus, VC method, or comparable funding rounds). Treat the results as rough guidance only and combine them with startup-specific frameworks.

Does this calculator include goodwill or intangible value?

Yes. Market-based and DCF methods inherently capture goodwill and intangible value (brand, customer relationships, IP, etc.) because they are based on earnings and cash flows. The asset-based method, by contrast, focuses on tangible assets and may understate the value of strong, profitable businesses.