A common way to value a small business is a multiple of its earnings. Estimate it here.
This calculator estimates a business's value from an earnings multiple, then adjusts for surplus assets and debt.
A common way to value a small business is to apply a multiple to its annual earnings, often measured as seller's discretionary earnings or EBITDA. The tool multiplies your earnings figure by the chosen multiple to get a base enterprise value. It then adds cash and other saleable assets not needed to run the business and subtracts debt a buyer would assume, arriving at an estimated equity value.
The right multiple depends on industry, growth, customer concentration, owner dependence, and how transferable the business is, and it can vary widely even within a sector. A single earnings figure can also be skewed by one unusual year, so a normalized average is often more reliable. This tool gives a rough range, not a formal appraisal, and real transactions hinge on due diligence and negotiation. It is not financial advice.
Multiples vary by industry and business quality; look at comparable sales in your sector and adjust for growth, risk, and owner dependence.
SDE, seller's discretionary earnings, adds back the owner's salary and perks and suits small owner-run businesses, while EBITDA is more common for larger firms.
No, it is a quick estimate; a real sale requires due diligence, normalized financials, and often a professional appraisal.
See the exact formula and a worked example on our methodology page.