Business Valuation Calculator
Estimate what a business is worth with an SDE, EBITDA or revenue multiple or a discounted cash flow (DCF): enterprise and equity value, a low–high range from editable typical multiples, SDE and adjusted EBITDA built from add-backs, an asset floor, your stake and a year-by-year DCF with sensitivity table.
How it works
Enterprise value = earnings or revenue × multiple · SDE = pre-tax profit + interest + D&A + one owner’s pay + personal + one-time expenses · Adjusted EBITDA = SDE − market manager salary · DCF value = Σ CFₜ ÷ (1 + r)ᵗ + TV ÷ (1 + r)ⁿ, with TV = CFₙ × (1 + g) ÷ (r − g) or CFₙ × exit multiple · Equity value = enterprise value − net debt · Asset value = assets − liabilities
Most small and mid-size businesses are priced as a multiple of earnings. For an owner-run business the earnings measure is seller’s discretionary earnings (SDE): pre-tax profit with interest, depreciation, one working owner’s full pay and benefits, personal expenses and one-off costs added back — the cash a single owner-operator would take home. Larger firms with a management team are priced on adjusted EBITDA, which is SDE minus a market salary for someone to run the business. Fast-growing or pre-profit companies are often quoted on a revenue multiple. Turn on the add-back builder to work out SDE and EBITDA from your profit and loss and compare all three methods at once; each uses a low–high typical multiple range you can edit under More options, and your own multiple (from comparable sales) gives the headline figure. The discounted cash flow method values the business from first principles: it projects free cash flow for a number of years, adds a terminal value for the years after (perpetual growth or an exit multiple), and discounts everything back at the return a buyer requires — the year-by-year table and sensitivity grid show how much the answer depends on those assumptions. Every method gives enterprise value, the price of the operating business; subtract net debt (debt minus cash) for equity value, what the owners actually receive. An optional asset-based value (assets at market value minus liabilities) acts as a floor, and an ownership share gives the pro-rata value of your stake.
Worked example
A company with $750,000 EBITDA valued at a 4× multiple has an enterprise value of 750,000 × 4 = $3,000,000, inside a typical 3–6× range of $2.25 million to $4.5 million. With no net debt, equity value is also $3,000,000; with $500,000 of net debt it would be $2,500,000. Built from the profit and loss instead — $450,000 pre-tax profit plus $40,000 interest, $60,000 depreciation, $150,000 owner pay, $20,000 personal and $30,000 one-time costs — SDE is $750,000 and adjusted EBITDA, after a $100,000 manager salary, is $650,000. As a DCF, $500,000 of free cash flow growing 5% a year for 5 years at a 20% discount rate with 3% long-term growth is worth about $3.26 million.
Sources: BizBuySell — Seller’s discretionary earnings calculator and Main Street multiples · NYU Stern (Damodaran) — EV/EBITDA multiples by industry
Frequently asked questions
What multiple should I use?
It depends on industry, size, growth, owner dependence and risk. As rough typical ranges, Main Street businesses sell for about 2–4× SDE, small private companies around 3–6× EBITDA and traditional businesses 0.5–2× revenue, while subscription software can reach several times revenue. The calculator’s ranges are editable starting points; recent sales of comparable businesses in your sector give the most reliable multiple.
What is the difference between SDE and EBITDA?
SDE adds back one owner’s entire salary and benefits, so it shows what a single owner-operator earns. EBITDA treats the owner as an employee: it subtracts a market salary for a manager. SDE is used for owner-run businesses up to a few million dollars of value; EBITDA for larger firms bought by investors who will hire management.
What is the difference between enterprise value and equity value?
Enterprise value is the value of the entire operating business, independent of how it is financed. Equity value is what the shareholders own — enterprise value minus net debt (debt minus surplus cash). A buyer effectively pays enterprise value but takes on or pays off the debt, which is why equity value is lower when the business carries debt.
Should I value on earnings, revenue or a DCF?
Earnings multiples suit profitable, established businesses. Revenue multiples are used for early-stage or high-growth companies where earnings are not yet meaningful. A DCF suits businesses with predictable cash flows or when you want to test specific growth and risk assumptions; use it as a cross-check on the multiple, because small changes in the discount or growth rate move the answer a lot.
What discount rate should I use in the DCF?
It is the return a buyer requires for the risk. Small private businesses are often discounted at 15–30%, mid-size private firms at 10–20% and large public companies at their weighted average cost of capital, often 7–11%. The sensitivity table shows the value at rates 2.5 and 5 points either side of yours.
Why is there an asset-based value?
A business is rarely worth less than its net assets, because the owner could sell the equipment, stock and receivables and pay off its debts. If the earnings value comes out below the asset value, the business earns a poor return on its assets, or the earnings figure is understated.
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Educational estimate, not financial advice.