Business Valuation Calculator
Estimate your business value using multiple methods — earnings multiples, revenue and assets.
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What small businesses actually sell for in 2026
Most owner-operated businesses under $5 million in revenue sell on a multiple of SDE (Seller Discretionary Earnings): net profit plus the owner salary, benefits, and one-time expenses added back. BizBuySell market reports put typical SDE multiples at 2.0x to 3.5x, with the median around 2.8x. Larger companies with management teams trade on EBITDA multiples instead, usually 4x to 6x for $1M+ EBITDA, higher for software and recurring-revenue models.
Industry matters more than size. Restaurants and retail cluster near 1.8x to 2.5x SDE because earnings depend on the owner and the lease. Service businesses with contracts (HVAC, accounting, MSPs) command 3x to 4x. SaaS with real retention can clear 4x to 6x revenue, not earnings. A business where customers would leave with the owner is worth less than the spreadsheet says.
The formula this calculator uses
SDE = net profit + owner salary + benefits + one-time/personal expenses Value = SDE x industry multiple + inventory at cost + fair value of real estate (if included)
Worked example: an HVAC service company
Net profit: $95,000 Owner salary added back: $60,000 One-time legal expense: $8,000 SDE: $163,000 Industry multiple (service w/ contracts): 3.2x Business value: $163,000 x 3.2 = $521,600 Plus parts inventory at cost: + $28,000 Asking price range: ~$520,000 - $580,000
What moves the multiple up or down
Up: 3+ years of clean, trending-up financials, recurring contracts, a manager who runs daily operations, diversified customers (no client above 15% of revenue), and transferable supplier agreements. Down: owner does the selling, one customer is 40% of revenue, the lease has 18 months left, or the books mix personal and business spending. Each red flag can cut 0.3x to 0.5x off the multiple, which on $163,000 of SDE is $50,000 to $80,000 of price.
Buyers using SBA 7(a) loans (the most common financing under $5M) also need the price to pass the bank appraisal and the debt-service test: the business must cover loan payments at roughly 1.25x from SDE after a market-rate manager salary. If your asking price fails that math, the pool of financeable buyers shrinks to cash buyers, who pay less.
Multiples based on BizBuySell Insight Reports and IBBA Market Pulse data through late 2025. Estimates are educational, not a formal valuation. For a sale, get a broker opinion of value or a certified appraisal.
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Frequently Asked Questions
How is a small business valued?
Small businesses are typically valued using: (1) EBITDA multiple (most common) — 3-8x earnings before interest, tax, depreciation, amortisation; (2) Revenue multiple — more common for high-growth or SaaS businesses; (3) Asset-based — useful for asset-heavy businesses; (4) Discounted Cash Flow (DCF) — complex but most theoretically rigorous.
What multiple is typical for selling a business?
Typical EBITDA multiples: service businesses 3-5x, SaaS 8-15x, retail 3-5x, manufacturing 4-7x, e-commerce 4-8x. Multiples rise with: strong recurring revenue, low customer concentration, proven management team, clean financials, growth trajectory and proprietary IP or brand. Multiples have compressed since 2022 as rates rose.
What makes a business worth more?
Value drivers: recurring/predictable revenue (subscriptions beat project work), diversified customer base (no single client over 15%), documented processes that work without the owner, strong margins, IP or brand moat, growth trajectory, clean books audited for 3 years, and a strong management team. Address these before any planned sale.