Business Valuation Calculator
Valuing a business matters whether you're buying, selling, seeking investment, planning a partnership buyout, or doing estate planning, and a reasonable estimate helps you set expectations before paying for a formal appraisal. Small businesses are often valued at 2 to 5 times annual earnings (using Seller's Discretionary Earnings or EBITDA), while asset-heavy businesses may be valued closer to their net asset value, and the right approach depends on the business's size, industry, and whether its value lies in its cash flow or its assets. This calculator blends both methods — an earnings-based value (annual earnings times an industry multiple) and a net asset value (total assets minus liabilities) — to give a reasonable blended estimate that accounts for both the income the business produces and the assets it owns. Enter the annual earnings (SDE or EBITDA), the industry earnings multiple (typically 2 to 5), total business assets, and total liabilities, and the calculator returns the estimated blended business value. Seller's Discretionary Earnings adds owner salary and perks back to profit and is used for small businesses, while EBITDA (earnings before interest, taxes, depreciation, and amortization) is used for larger businesses, so choose the one that fits the business's size. The earnings multiple depends on industry, growth, and risk: stable, growing businesses command higher multiples, while risky or declining ones command lower. Asset value is more appropriate for asset-heavy businesses (real estate, equipment, inventory) or businesses with low profits but valuable assets, and the blended approach accounts for both. This is an estimate, not a formal appraisal — a certified business appraiser considers market comparables, intangibles, growth, and risk for a formal valuation. To increase a business's value, grow earnings, reduce dependence on the owner, diversify customers, document systems, and maintain clean financials, because higher and more stable earnings raise the multiple buyers will pay.
Business Valuation Calculator
Estimate a business's value using earnings multiples and net assets.
Estimated business value
$285,000
Blended estimate
Earnings-based value
$450,000
3x earnings
Net asset value
$120,000
Small businesses are often valued at 2-5 times annual earnings (SDE or EBITDA). Asset-heavy businesses may be valued closer to net asset value. A formal appraisal considers growth, risk, and market comparables.
How to Use This Calculator
- 1Enter the annual earnings (SDE or EBITDA).
- 2Enter the industry earnings multiple (typically 2-5).
- 3Enter total business assets and liabilities.
- 4Read the estimated blended business value.
Why It Helps
- ✓Quick estimate for buying or selling.
- ✓Blends earnings and asset approaches.
- ✓Helps set a realistic asking price.
- ✓Useful for partnership buyouts and estate planning.
About This Calculator
Valuing a business matters whether you're buying, selling, seeking investment, planning a partnership buyout, or doing estate planning, and a reasonable estimate helps you set expectations before paying for a formal appraisal. Small businesses are often valued at 2 to 5 times annual earnings (using Seller's Discretionary Earnings or EBITDA), while asset-heavy businesses may be valued closer to their net asset value, and the right approach depends on the business's size, industry, and whether its value lies in its cash flow or its assets. This calculator blends both methods — an earnings-based value (annual earnings times an industry multiple) and a net asset value (total assets minus liabilities) — to give a reasonable blended estimate that accounts for both the income the business produces and the assets it owns. Enter the annual earnings (SDE or EBITDA), the industry earnings multiple (typically 2 to 5), total business assets, and total liabilities, and the calculator returns the estimated blended business value. Seller's Discretionary Earnings adds owner salary and perks back to profit and is used for small businesses, while EBITDA (earnings before interest, taxes, depreciation, and amortization) is used for larger businesses, so choose the one that fits the business's size. The earnings multiple depends on industry, growth, and risk: stable, growing businesses command higher multiples, while risky or declining ones command lower. Asset value is more appropriate for asset-heavy businesses (real estate, equipment, inventory) or businesses with low profits but valuable assets, and the blended approach accounts for both. This is an estimate, not a formal appraisal — a certified business appraiser considers market comparables, intangibles, growth, and risk for a formal valuation. To increase a business's value, grow earnings, reduce dependence on the owner, diversify customers, document systems, and maintain clean financials, because higher and more stable earnings raise the multiple buyers will pay.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial, tax, or investment advice. Results depend on assumptions that may not reflect your actual situation.
Frequently Asked Questions
What is SDE vs. EBITDA?
Seller's Discretionary Earnings adds owner salary and perks back to profit (used for small businesses). EBITDA is earnings before interest, taxes, depreciation, and amortization (used for larger businesses).
What earnings multiple should I use?
Typically 2-5x for small businesses, depending on industry, growth, and risk. Stable, growing businesses command higher multiples.
When is asset value more appropriate?
For asset-heavy businesses (real estate, equipment, inventory) or businesses with low profits but valuable assets. The blended approach accounts for both.
Is this a formal appraisal?
No. It is an estimate. A certified business appraiser considers market comparables, intangibles, growth, and risk for a formal valuation.
How do I increase my business's value?
Grow earnings, reduce dependence on the owner, diversify customers, document systems, and maintain clean financials. Higher, stable earnings raise the multiple buyers will pay.
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Written by
James MitchellSenior Financial Analyst & Personal Finance Expert
Certified Financial Planner (CFP) • MBA in Finance, University of Chicago Booth School of Business