Business Valuation Calculator
Estimate business value using three methods — revenue multiples, earnings multiples, and asset-based valuation — with industry benchmarks.
Business details
Updates as you typeFormula
- V
- Estimated business value (the weighted average)
- R
- Annual revenue (top-line sales)
- E
- Annual earnings — SDE or EBITDA
- A, L
- Total assets and total liabilities (book value = A − L)
- mind
- Industry multiplier (e.g. 6–10× for SaaS, 1–3× for retail)
- s
- Stage factor: 0.70× (startup / declining), 1.00× (growing), 1.15× (established)
- wi
- Method weight: 1× by default, 2× when a primary method is chosen
- Industry: —
- Stage factor s: —
- Revenue multiple Vrev = —
- Earnings multiple Vearn = —
- Asset-based Vast = —
- Weighted average V = —
Valuation is an estimate, not a price. A real sale price also depends on buyer demand, deal structure, customer concentration, recurring-revenue share, and due-diligence findings. Treat this as a starting range, then refine with a broker or M&A advisor.
Examples
How It Works
Revenue Multiple: Value = Annual Revenue × Industry Multiplier. This method is common for high-growth companies (especially SaaS) where earnings may be low but revenue is growing rapidly. SaaS companies trade at 6–10× revenue, while retail businesses trade at 1–3×.
Earnings Multiple: Value = SDE or EBITDA × Industry Multiplier. This is the most common method for profitable small businesses. SDE (Seller's Discretionary Earnings) includes the owner's salary and benefits, making it the standard for owner-operated businesses. Multiples typically range from 2–6× for small businesses and higher for larger or high-growth companies.
Asset-Based: Value = Total Assets − Total Liabilities. This provides a floor value (book value) and is most relevant for asset-heavy businesses like real estate, manufacturing, or construction. For service businesses, asset value is usually much lower than earnings-based value.
The weighted average gives equal weight to each method that has valid data. In practice, buyers and sellers negotiate using whichever method is most favorable to their position. Professional valuations may weight methods differently based on the specific business and transaction.
Tips & Best Practices
Frequently Asked Questions
What is the difference between SDE and EBITDA?
SDE (Seller's Discretionary Earnings) adds back the owner's salary, benefits, and personal expenses to earnings — used for owner-operated small businesses. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is used for larger businesses with professional management. SDE is typically higher than EBITDA by the amount of the owner's compensation.
Why do SaaS companies have such high multiples?
SaaS businesses have recurring revenue (subscriptions), high gross margins (70-90%), low variable costs, and scalable delivery. Investors pay premium multiples because revenue is predictable and the business can grow without proportional cost increases. A SaaS company at 8× revenue may be fairly valued while a restaurant at 8× would be wildly overpriced.
Which valuation method matters most?
For profitable small businesses: earnings multiple (SDE). For high-growth startups: revenue multiple. For asset-heavy businesses (real estate, manufacturing): asset-based. Most transactions use 2-3 methods and negotiate between them. The right method depends on the business type and buyer's perspective.
How accurate is this calculator?
This provides rough estimates based on industry averages. Actual business value depends on many qualitative factors: customer concentration, owner dependency, growth trends, market conditions, competitive advantages, and transaction structure. Use this for directional planning, not for pricing a real transaction.