Business Valuation Calculator (Multiple Methods)

Estimate what a business is worth using three standard approaches: Discounted Cash Flow (DCF), market multiples, and asset-based valuation. Compare results side by side and explore scenarios.

Discounted Cash Flow (DCF) Valuation

Project free cash flows, choose a discount rate and terminal growth, and estimate the present value of the business.

$

Owner-adjusted free cash flow after normalizing owner salary.

%

Expected average growth during the forecast period.

%

Higher for riskier, smaller, or less stable businesses.

%

Long-term growth after the forecast period (usually 0–3%).

$

Cash not needed for operations that a buyer would receive.

$

Used to convert enterprise value to equity value.

How this business valuation calculator works

This tool brings together three of the most common valuation approaches used by analysts, investors, and business brokers:

  • Income approach (DCF) – values the business based on the present value of future cash flows.
  • Market approach (multiples) – applies EBITDA and revenue multiples from comparable deals.
  • Asset-based approach – focuses on the fair market value of assets minus liabilities.

Using several methods side by side helps you understand a reasonable value range instead of a single “magic number”.

1. Discounted Cash Flow (DCF) method

The DCF method estimates value by projecting future free cash flows and discounting them back to today at a rate that reflects risk.

Step 1 – Forecast cash flows:

For each year \( t = 1 \dots N \):

\( \text{FCF}_t = \text{FCF}_0 \times (1 + g)^t \)

Step 2 – Discount each cash flow:

\( \text{PV}_t = \dfrac{\text{FCF}_t}{(1 + r)^t} \)

Step 3 – Terminal value at year N (Gordon growth):

\( \text{TV}_N = \dfrac{\text{FCF}_{N+1}}{r - g_{\text{terminal}}} \), where \( \text{FCF}_{N+1} = \text{FCF}_N \times (1 + g_{\text{terminal}}) \)

Step 4 – Enterprise value:

\( \text{EV} = \sum_{t=1}^{N} \text{PV}_t + \dfrac{\text{TV}_N}{(1 + r)^N} \)

Step 5 – Equity value:

\( \text{Equity} = \text{EV} + \text{Excess cash} - \text{Debt} \)

Choosing inputs for DCF

  • Free cash flow (FCF): Start from net income, add back non-cash items, adjust for working capital and capital expenditures, and normalize owner salary.
  • Growth rate: Reflects expected growth in FCF over the forecast period. Conservative assumptions are usually better than aggressive ones.
  • Discount rate: Represents the required return for the risk of the business. Small private companies often use 15–30%.
  • Terminal growth: Long-term growth after the forecast period, typically 0–3% in mature markets.

2. Market multiples method

The market approach values your business by applying valuation multiples observed for similar companies or transactions.

EBITDA multiple valuation:

\( \text{Enterprise value} = \text{EBITDA} \times \text{EBITDA multiple} \)

\( \text{Equity value} = \text{Enterprise value} + \text{Excess cash} - \text{Debt} \)

Revenue multiple valuation:

\( \text{Enterprise value} = \text{Revenue} \times \text{Revenue multiple} \)

\( \text{Equity value} = \text{Enterprise value} + \text{Excess cash} - \text{Debt} \)

Where to get multiples

  • Industry reports and transaction databases (e.g., from brokers or valuation firms).
  • Public company comparables, adjusted downward for size and liquidity.
  • Rule-of-thumb ranges from business brokers for specific sectors (e.g., dental practices, SaaS, HVAC contractors).

3. Asset-based valuation

The asset-based approach is especially relevant for asset-heavy or unprofitable businesses, or when the business might be liquidated.

Adjusted net asset value:

\( \text{Equity value} = \text{Fair market value of assets} - \text{Total liabilities} \)

Key steps:

  1. List all assets and adjust them to fair market value (not just book value).
  2. Include off-balance sheet items where relevant (leases, contingent liabilities).
  3. Subtract all liabilities, including interest-bearing debt and other obligations.

Interpreting the valuation range

After you run all three methods, you will typically see a range of values. Professionals often:

  • Discard clearly unrealistic outliers (e.g., if one method assumes impossible growth).
  • Weight methods differently depending on the situation (e.g., DCF and EBITDA multiples for a stable, profitable business; asset-based for a distressed or asset-heavy business).
  • Use the range to guide negotiations, financing discussions, and strategic planning.

Limitations and professional advice

This calculator is designed for education and high-level planning. It does not:

  • Incorporate detailed tax modeling, working capital adjustments, or deal structure (earn-outs, seller notes, etc.).
  • Replace a formal valuation required for legal disputes, ESOPs, financial reporting, or tax filings.

If you need a defensible valuation for a transaction, litigation, or regulatory purpose, consider engaging a credentialed valuation expert (e.g., ASA, CFA, CPA/ABV, CBV) who can analyze your detailed financials and industry context.

Business valuation FAQ

How accurate is this business valuation calculator?

It provides a structured estimate based on standard methods and your assumptions. It is useful for ballpark figures, scenario analysis, and preparing for conversations with buyers, investors, or advisors. For legal, tax, or high-stakes transactions, you should obtain a formal valuation from a qualified professional.

Which valuation method should I rely on?

There is no single “best” method. DCF is powerful when you have reliable forecasts. Market multiples are widely used in practice because they reflect real-world deal data. Asset-based valuation is more appropriate for asset-heavy or unprofitable businesses. Most professionals triangulate across methods and focus on a value range.

What discount rate should I use?

The discount rate should reflect the risk of the cash flows. Small private businesses often use 15–30%. Higher rates are used for early-stage, concentrated, or volatile businesses; lower rates for larger, diversified, and stable companies. If you are unsure, test several rates and see how sensitive the valuation is.

Can I use this for valuing a startup?

You can, but results will be more uncertain because startup cash flows and growth are hard to predict. Early-stage startups are often valued using funding rounds, comparable deals, or revenue multiples rather than traditional DCF. Use this tool as a scenario planner, not a precise valuation.