Business Valuation Calculator - EBITDA & SDE Multiple
Calculate your business value using EBITDA multiples, SDE multiples, revenue multiples, or DCF analysis. Get industry-specific valuation ranges for M&A planning.
Financial Data
Earnings Before Interest, Taxes, Depreciation, Amortization
Seller's Discretionary Earnings (for small businesses)
Valuation Multiples
Industry range: 3x - 5x
Industry range: 0.5x - 1.5x
Estimated Value
Business Value
$2.00M
EBITDA Multiple Method
Industry Range
Based on 3x - 5x EBITDA
All Methods
What Is a Business Valuation Calculator?
A business valuation calculator estimates a company value by applying common planning methods to revenue, EBITDA, seller discretionary earnings, or projected cash flow. It is useful for setting a sale expectation, comparing buyer offers, planning a partner buyout, or testing how growth and risk assumptions change a valuation range.
Best first estimate
Use EBITDA or SDE multiples when the business is already profitable.
Best growth check
Use revenue multiples for high-growth or early-stage companies.
Best diligence reminder
Compare methods and document assumptions before using a result in negotiations.
Typical Business Valuation Multiples by Industry
| Industry | EBITDA Multiple | SDE Multiple | Revenue Multiple |
|---|---|---|---|
| SaaS / Software | 8x - 15x | 5x - 10x | 3x - 10x |
| Healthcare | 6x - 10x | 4x - 7x | 1x - 3x |
| Professional Services | 4x - 8x | 3x - 5x | 0.8x - 2x |
| Manufacturing | 4x - 7x | 3x - 5x | 0.5x - 1.5x |
| E-commerce | 3x - 6x | 2.5x - 4x | 0.5x - 2x |
| Retail | 3x - 5x | 2x - 3.5x | 0.3x - 1x |
| Restaurant | 2x - 4x | 1.5x - 3x | 0.3x - 0.8x |
These are directional planning ranges, not live transaction comps. Multiples vary based on size, growth, profitability, buyer demand, customer concentration, and deal terms. For sale planning, compare the calculator output with documented assumptions and professional diligence. See the SBA guidance on selling a business and IRS business valuation guidelines for examples of valuation documentation expectations.
How to Calculate Business Valuation
EBITDA Multiple Method
Most common for businesses with $1M+ revenue. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) represents operating cash flow.
Best for: Mid-market businesses, PE acquisitions
SDE Multiple Method
Preferred for owner-operated small businesses. SDE (Seller's Discretionary Earnings) adds back owner salary and perks to show true earning potential.
Best for: Small businesses under $5M revenue
Revenue Multiple Method
Used for high-growth companies or those with negative earnings. Common in tech and SaaS where growth matters more than current profitability.
Best for: SaaS, high-growth startups
DCF Analysis
Projects future cash flows and discounts them to present value. Most theoretically sound but requires accurate growth and discount rate assumptions.
Best for: Stable businesses with predictable cash flows
Factors That Increase Business Value
Value Drivers (+)
- ✓Recurring Revenue: Subscriptions, contracts, repeat customers
- ✓Strong Growth: 20%+ annual revenue growth
- ✓Diversified Customers: No customer over 10% of revenue
- ✓Strong Management: Business runs without owner
- ✓Clean Financials: Audited or reviewed statements
- ✓Proprietary Assets: Patents, technology, brand
Value Detractors (-)
- ✗Owner Dependency: Business relies on owner relationships
- ✗Customer Concentration: Top customer over 25% of revenue
- ✗Declining Revenue: Negative growth trend
- ✗Industry Risk: Disruption, regulation, competition
- ✗Messy Books: Commingled finances, cash transactions
- ✗Lease Issues: Short-term or unfavorable lease
Worked Examples
Owner-operated service business
A local service business has $220,000 in SDE after adding back owner salary and discretionary expenses. If similar businesses trade near 2.5x SDE, the planning value is:
A buyer may reduce that value if the owner is essential to sales or if one customer represents a large share of revenue.
Profitable SaaS company
A SaaS company has $600,000 in EBITDA and durable recurring revenue. At a 9x EBITDA planning multiple, the enterprise value estimate is:
Net debt, cash, churn, growth rate, and customer concentration can still move the final equity value materially.
Frequently Asked Questions
What is the difference between EBITDA and SDE?
EBITDA is typically used for larger or more institutional businesses because it focuses on operating earnings before financing and accounting choices. SDE, or Seller's Discretionary Earnings, is more common for owner-operated small businesses because it adds back owner compensation and discretionary expenses to estimate the benefit available to a buyer.
Which business valuation method should I use first?
Use an EBITDA multiple for profitable mid-market companies, an SDE multiple for owner-operated small businesses, a revenue multiple for high-growth or early-stage companies, and DCF only when you can defend the cash-flow forecast and discount rate. For a practical range, compare at least two methods instead of relying on one output.
Are the industry multiple ranges live market data?
No. The ranges in this calculator are directional planning ranges. Actual transaction multiples depend on current buyer demand, company size, growth, recurring revenue, customer concentration, deal structure, and diligence findings. Use the result as a starting estimate, not as a certified appraisal.
How can I increase my business valuation before selling?
The highest-leverage improvements are cleaner financial statements, recurring revenue, lower customer concentration, documented operating processes, a management team that can run the business without the owner, and stable or growing margins. These reduce buyer risk and can support a stronger multiple.
When should I get a professional valuation?
Get a professional valuation for a sale process, partner buyout, estate or gift tax planning, divorce, shareholder dispute, financing package, or any situation where the result needs to withstand buyer, lender, court, or tax review. This calculator is for planning and scenario analysis only.
About This Calculator
Estimate business value using EBITDA, SDE, revenue multiple, and discounted cash flow methods. Compare directional valuation ranges for sale planning, acquisitions, partner buyouts, and investor conversations.
Frequently Asked Questions
What are the most common business valuation methods and when should I use each?
5 primary valuation methods for small-mid sized businesses: (1) REVENUE MULTIPLE: Business value = Annual revenue × Industry multiple (0.5-15x depending on industry). Best for: Early-stage, pre-profit businesses, SaaS (5-10x ARR). Examples: $2M revenue SaaS × 6x = $12M, $500K retail × 0.5x = $250K. Pros: Simple, fast. Cons: Ignores profitability. (2) EBITDA MULTIPLE: Value = EBITDA × Multiple (3-12x). Best for: Established profitable businesses, private equity deals. Example: $800K EBITDA × 5x = $4M. Higher multiples for: Tech (8-12x), Healthcare (6-9x), Manufacturing (4-6x), Retail (3-5x). (3) SDE MULTIPLE: Value = SDE × 2-4x. SDE = Net profit + Owner salary + Benefits + Non-recurring expenses. Best for: Owner-operated businesses <$5M revenue. Example: $150K profit + $80K owner salary + $20K benefits = $250K SDE × 3x = $750K. (4) DCF: Present value of future cash flows. Best for: Stable, predictable businesses. Formula complex but accurate. (5) ASSET-BASED: Sum of assets - liabilities. Best for: Asset-heavy businesses, liquidation scenarios. Use multiple methods for range: $3M-$5M valuation = realistic expectation.
What factors increase or decrease my business valuation and how can I maximize value?
VALUE DRIVERS (Increase 20-100%+): (1) Recurring revenue: 30-60% ARR/MRR adds 2-4x multiple premium vs one-time sales. SaaS $1M ARR at 8x > Services $1M revenue at 3x. (2) Growth rate: 20%+ YoY growth = 50-100% valuation premium. 50% growth = up to 15x revenue. (3) Customer diversification: Top customer <10% revenue = safer (higher multiple). >30% concentration = 20-40% discount. (4) Profit margins: 20%+ EBITDA margin = premium. 40%+ = exceptional (tech multiples). (5) Systems/processes: Business runs without owner = 30-50% premium (owner-independent). (6) Market position: #1-2 in niche = 25-50% premium. Defensible moat (patents, contracts, brand) adds value. VALUE DETRACTORS (Decrease 20-50%): (1) Owner dependency: 1-2 key employees = risky (-30%). (2) Revenue decline: -10% YoY = 40-60% valuation drop. (3) Customer churn: >10% annual = concerning for SaaS. (4) One-time contracts vs recurring. (5) Legal issues, disputes, outdated tech. MAXIMIZE VALUE PREP (12-24 months before sale): (1) Clean financials: 3 years audited statements add 10-15% value. (2) Grow revenue +20%/year. (3) Reduce owner hours to <20/week. (4) Document SOPs. (5) Diversify customers. (6) Switch to recurring model. (7) Increase margins by 5-10%. Result: $2M business →$3-3.5M with optimization (+50-75%).
Mike is a software engineer with a background in applied mathematics. He develops and maintains SuperCalc's engineering, conversion, and math utility calculators.
- M.S. in Applied Mathematics, MIT
- Former quantitative developer
- 6 years building computational tools