Business Valuation Calculator
Estimate business market enterprise value for acquisitions, partner buyouts, or exit planning. Calculate valuation ranges based on Seller Discretionary Earnings (SDE) or normalized EBITDA multiplied by industry transaction multiples.
Seller Discretionary Earnings for small business or EBITDA for mid-market
Historical sector transaction multiple (typically 2.5x to 6.0x)
Surplus cash and inventory assets transferred with sale
Mid-point commercial valuation based on earnings multiple and assets
How to Use This Calculator
- Calculate normalized Seller Discretionary Earnings (SDE) or EBITDA from your financial statements.
- Select appropriate industry multiple (service/retail: 2.0x–3.5x; B2B manufacturing: 3.5x–5.0x; SaaS: 5.0x–10.0x+).
- Add transferable cash, inventory, or unencumbered equipment value.
- Review estimated valuation range to establish realistic listing or acquisition price expectations.
Formula & Calculation Methodology
Applies market capitalization multiple to normalized annual earnings and adds transferable surplus working capital.
Worked Example
$250,000 SDE with a 3.5x multiple and $40,000 in working capital assets
Frequently Asked Questions
What is the difference between SDE and EBITDA in business valuation?↓
SDE (Seller Discretionary Earnings) adds back the business owner salary and personal perks, used for small owner-operated businesses under $2M earnings. EBITDA assumes professional management is hired.
What factors increase a business valuation multiple?↓
Multiples expand with recurring subscription revenue, low customer concentration (no client > 15%), strong second-tier management, proprietary intellectual property, and high YoY revenue growth.
What factors cause valuation multiple compression?↓
Multiples compress when the owner is essential to daily operations, revenues are declining, suppliers hold monopoly power, or customer contracts are informal handshakes.
Does valuation include real estate property?↓
Commercial real estate is generally valued separately from the operating enterprise. Real estate is either leased back to the buyer or appraised separately by commercial property valuers.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.