Business Valuation Calculator
Estimate what your business is worth using the earnings-multiple method. Enter your annual earnings and a multiple typical for your industry, then adjust for cash and debt to see both enterprise value and the equity value an owner would keep.
How the business valuation calculator works
The most common quick way to value a small business is the earnings-multiple method. You take a normalized measure of annual profit — usually Seller's Discretionary Earnings (SDE) for owner-operated businesses or EBITDA for larger ones — and multiply it by a factor that reflects what buyers pay for businesses like yours.
Equity value = Enterprise value + Cash on hand − Total debt
Enterprise value represents the operating business itself, independent of how it is financed. To get to equity value — the amount an owner would actually walk away with — you add the cash sitting in the business and subtract any debt that must be paid off. That is why two businesses with identical earnings can be worth very different amounts to their owners.
Why we show a range
No single multiple is exactly right, so this calculator also shows a range using half a turn on either side of your chosen multiple. If you value $200,000 of earnings at 3×, the range spans 2.5× to 3.5× — roughly $500,000 to $700,000 of enterprise value, then adjusted for cash and debt. Treat the midpoint as your working estimate and the range as a realistic negotiating band. Real deals land somewhere inside that spread depending on how the numbers hold up under scrutiny.
What moves the multiple
- Industry — recurring-revenue and asset-light businesses typically earn higher multiples.
- Size — larger, more established businesses usually command a premium over very small ones.
- Growth — a business with a rising, provable growth trend is worth more than a flat one.
- Owner dependence — the more the business relies on you personally, the lower the multiple buyers will pay.
- Quality of earnings — clean, verifiable financials support the top of the range.
Using the result
- Normalize your earnings first: add back one-time and personal expenses to reflect true operating profit.
- Compare against real comparable sales in your industry before trusting any single multiple.
- Check the buyer's likely debt-service coverage if the deal will be financed.
- Get a formal valuation before you list or sell — this tool is a starting point, not an appraisal.
Frequently asked questions
How do you value a small business?
A common quick method multiplies the business's annual earnings, such as SDE or EBITDA, by an industry multiple to get enterprise value. You then add cash on hand and subtract total debt to estimate the equity value an owner would actually receive.
What is the difference between enterprise value and equity value?
Enterprise value is the value of the business operations before financing, equal to earnings times the multiple. Equity value is what the owner keeps: enterprise value plus cash on hand minus total debt. Buyers often quote enterprise value while sellers care most about equity value.
What earnings multiple should I use?
Multiples vary widely by industry, size, growth, and risk. Many small businesses trade in a range of roughly 2 to 5 times SDE, while larger or fast-growing companies can command more. Use a multiple typical for your specific industry and adjust for how stable and transferable your earnings are.
Is this valuation an official appraisal?
No. This tool gives a rough, ballpark estimate to frame a conversation. A formal valuation from a qualified appraiser or broker considers detailed financials, comparable sales, assets, and market conditions, and can differ significantly from a simple multiple.
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This calculator is for educational and informational purposes only and does not constitute financial, legal, or valuation advice. Estimates are based on the values you enter and a simplified multiple method. Consult a qualified appraiser or business broker before buying or selling a business.