Calculate your business value using multiple proven valuation methods. Get accurate estimates with EBITDA multiples, revenue multiples, and asset-based approaches.
Earnings Before Interest, Taxes, Depreciation, and Amortization
Select based on your industry and business characteristics
Business valuation is the process of determining the economic value of a company. Whether you're planning to sell your business, seeking investment, settling a partnership dispute, or simply want to understand your company's worth, accurate valuation is essential. Different valuation methods serve different purposes and industries, and using multiple approaches provides a more comprehensive picture of your business value.
Professional valuations consider numerous factors including financial performance, market conditions, industry trends, competitive position, growth potential, and risk factors. While this calculator provides estimates based on common valuation methods, complex transactions often require professional appraisal from certified business valuators.
Values business based on Earnings Before Interest, Taxes, Depreciation, and Amortization multiplied by an industry-specific factor.
Formula:
EBITDA × Industry Multiple
Best For:
Profitable businesses with consistent cash flow
Pros:
Focuses on operational performance, widely accepted
Cons:
Requires positive EBITDA, ignores capital structure
Values business based on annual revenue multiplied by an industry-specific factor, useful for high-growth or pre-profit companies.
Formula:
Annual Revenue × Industry Multiple
Best For:
Growth companies, SaaS, tech startups
Pros:
Works for unprofitable companies, simple to calculate
Cons:
Ignores profitability, can overvalue inefficient businesses
Values business based on total assets minus liabilities, focusing on tangible and intangible assets owned by the company.
Formula:
Total Assets - Total Liabilities
Best For:
Asset-heavy businesses, liquidation scenarios
Pros:
Concrete, based on balance sheet, conservative
Cons:
Ignores earning potential, undervalues intangibles
Valuation multiples vary significantly by industry based on growth rates, profit margins, capital requirements, and market conditions. Here are typical ranges:
| Industry | EBITDA Multiple | Revenue Multiple | Key Factors |
|---|---|---|---|
| SaaS / Software | 8-15x | 4-10x | Recurring revenue, growth rate, churn |
| E-commerce | 4-8x | 0.5-2x | Customer acquisition cost, margins |
| Manufacturing | 4-7x | 0.5-1.5x | Equipment value, contracts, efficiency |
| Professional Services | 3-6x | 0.5-1.5x | Client relationships, recurring contracts |
| Retail | 3-6x | 0.3-0.8x | Location, inventory turnover, margins |
| Restaurant / Food Service | 2-4x | 0.3-0.6x | Location, reputation, lease terms |
| Healthcare Services | 5-10x | 0.8-2x | Regulatory compliance, patient base |
| Construction | 3-6x | 0.3-0.8x | Backlog, equipment, reputation |
These are general ranges. Actual multiples depend on company size, growth rate, profitability, market position, and current M&A market conditions. Premium businesses can command higher multiples.
Small business owners often pay themselves above or below market rates. Normalize EBITDA by adjusting owner compensation to market rate for the role.
Example:
Owner takes $200K salary but market rate is $120K. Add back $80K to EBITDA for accurate valuation. Adjusted EBITDA = Reported EBITDA + $80K
Remove non-recurring items to show normalized earning power. This includes one-time legal fees, equipment purchases, or unusual revenue spikes.
Example:
$50K lawsuit settlement in 2023. Add back to EBITDA as it won't recur. Similarly, remove one-time $100K project revenue that won't repeat.
Consider working capital needed to operate the business. Buyers typically expect seller to leave sufficient working capital for smooth transition.
Typical Approach:
Calculate average working capital (current assets - current liabilities) over 12 months. This amount stays with business at closing, reducing net proceeds to seller.
Smaller businesses often trade at lower multiples due to higher risk, limited buyer pool, and financing challenges. Apply discounts accordingly.
Typical Discounts:
Business: B2B project management software with 500 customers
Financials: $2M ARR, $600K EBITDA (30% margin), 95% revenue retention
EBITDA Method: $600K × 10x multiple = $6M
Revenue Method: $2M × 5x multiple = $10M
Valuation Range: $6M - $10M
High multiples due to recurring revenue, strong retention, and growth potential
Business: Custom metal fabrication with 20 employees
Financials: $5M revenue, $750K EBITDA (15% margin), $2M in equipment
EBITDA Method: $750K × 5x multiple = $3.75M
Asset-Based: $3M assets - $500K liabilities = $2.5M
Valuation Range: $2.5M - $3.75M
Moderate multiples; asset value provides floor, EBITDA method more relevant for going concern
Business: Niche outdoor gear retailer, 3 years old
Financials: $3M revenue, $450K EBITDA (15% margin), 40% YoY growth
EBITDA Method: $450K × 6x multiple = $2.7M
Revenue Method: $3M × 1x multiple = $3M
Valuation Range: $2.7M - $3M
Growth rate supports higher end of range; strong brand and customer base add value
Business: Marketing agency with 15 employees, 30 active clients
Financials: $2.5M revenue, $500K EBITDA (20% margin), 60% recurring
EBITDA Method: $500K × 4.5x multiple = $2.25M
Revenue Method: $2.5M × 1x multiple = $2.5M
Valuation Range: $2.25M - $2.5M
Recurring contracts increase value; owner dependency may reduce multiple without strong team
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