A small business is typically worth 2–4× its annual EBITDA. To value a business for sale, multiply your profit (SDE or EBITDA) by an industry-specific multiple drawn from recent comparable transactions. SaaS businesses trade at 10–15× EBITDA because recurring revenue reduces buyer risk; restaurants clear at 2–4× EBITDA because of thin margins and lease dependency. The six commonly used valuation methods are (1) comparable transaction, (2) EBITDA multiple, (3) revenue multiple, (4) discounted cash flow (DCF), (5) asset-based, and (6) Seller's Discretionary Earnings (SDE). Brokers and M&A advisors typically blend two — usually EBITDA and revenue — into a weighted estimate. Two free databases anchor the multiples used by professional advisors: the BizBuySell 2025 Insight Report (4,847 closed transactions) and the Pepperdine Private Capital Markets Project. Both publish median multiples by industry, transaction size, and growth profile, so a defensible low / mid / high range is computable in minutes.
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Estimates what your business is worth using three standard approaches: Asset, Income (SDE/EBITDA multiple), and Market (industry multiple). Enter your revenue, profit, assets, and industry to get an instant, defensible low / mid / high range. Free, no registration required.
Top-line sales before expenses
Net profit + owner's salary + add-backs (or leave blank if using EBITDA)
Net profit before interest, taxes, depreciation, amortization
Equipment, inventory, receivables, IP, real estate owned by the business
Multiples vary by industry risk and growth profile
Established businesses earn stable multiples; newer SaaS often earns a premium
Subscriptions, retainers, maintenance contracts as % of total revenue
Growth rate adjusts the industry multiple up or down
Enter at least your revenue, SDE, or EBITDA above to see methodology explanations.
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Explore SBA Loans →An informal opinion of value is free. FE International, Website Closers, and Sunbelt specialize in businesses $1M–$50M.
Talk to a Broker →There are six widely cited ways to value a small business, but in practice brokers and M&A advisors blend two or three into a single weighted estimate. The right method depends on your industry, profit profile, deal size, and who the likely buyer is. Below is a plain-English walkthrough of the three you'll see most often on a sell-side mandate.
The EBITDA multiple — Earnings Before Interest, Taxes, Depreciation, and Amortization — is the workhorse for businesses between $5M and $500M in transaction value. The buyer takes your pre-interest, pre-tax operating profit and multiplies it by an industry-specific multiple drawn from comparable transactions. Buyers under $5M prefer this approach because it strips out financing decisions, isolates operating performance, and lets them compare your business to acquisition targets across different capital structures. Worked example: a Professional Services firm with $300K in EBITDA at a 4× industry multiple implies a $1.2M valuation. Most private equity buyers and strategic acquirers will apply a 7–12× multiple on EBITDA when the business has recurring revenue, strong management depth, and demonstrable margin durability.
The revenue multiple is used when profit is volatile, negative, or not yet representative of the steady-state business. It is the dominant method for early-stage SaaS, fast-scaling e-commerce brands, and businesses still investing heavily in growth. Worked example: an e-commerce brand with $2M annual revenue trading at 0.5× revenue implies a $1M valuation; if EBITDA is positive, the EBITDA method will almost always yield a higher number. The revenue method has a known downside: it doesn't reward profitability. A $5M revenue business running at break-even and a $5M revenue business running at 20% margins will look identical under the revenue method but very different to a buyer. Most brokers will weight their estimate heavily toward EBITDA once the business is profitable, which is why this calculator blends the two.
DCF projects 5+ years of free cash flow and discounts those cash flows back to present value at the buyer's cost of capital. It is the most rigorous method but also the most assumption-heavy: the output is highly sensitive to the discount rate, terminal growth assumption, and projected margin trajectory. DCF is reserved almost exclusively for businesses valued above $5M and is unlikely to be the primary method in any small business sale. Brokers usually skip DCF for owner-operated businesses under $5M because comparable transaction data is more defensible — buyer's SBA lenders and quality-of-earnings firms will press-test against comps, not against a DCF model. If you receive a DCF-only valuation for a $1.5M sole proprietorship, ask the advisor why they chose to walk away from market comparables.
Industry multiples are the single biggest determinant of your valuation range. Different industries carry different risk profiles, growth expectations, and asset bases — and a business broker will apply a different multiple to each. The table below summarizes mid-2026 multiples from published research, with low and high ends reflecting slower-growth or higher-risk selling conditions.
| Industry | Revenue Multiple | EBITDA Multiple | Notes |
|---|---|---|---|
| SaaS | 3–6× ARR | 10–15× | Recurring revenue + scalability command the highest premiums; net revenue retention > 110% is the differentiator |
| E-commerce | 1–3× | 5–10× | Brand value and repeat customer rate drive the multiple; thin margins compress valuation |
| Professional Services | 0.5–1.5× | 3–5× | Wide range based on owner dependence; contract revenue lifts multiple; key-person risk compresses it |
| Manufacturing | 0.3–0.8× | 4–7× | Equipment and inventory provide asset floor; recurring contracts and customer concentration matter |
| Restaurants | 0.2–0.5× | 2–4× | Lease dependency and thin margins; franchise licenses command the high end |
| Healthcare | 0.8–1.5× | 3–5× | Regulatory moat and patient relationships; medical and dental practices at the high end |
Source: BizBuySell 2025 Insight Report (4,847 transactions), Pepperdine Private Capital Markets Project Q1 2026, IBBA Market Pulse Q1 2026, RetireStack analysis.
Two businesses in the same industry with identical revenue and profit can sell at very different multiples. The qualitative factors below explain why buyers discount or premium a specific business — and they are typically what your broker spends the most time on during pre-sale preparation. Each lever can move your valuation by 0.5× to 1.5× depending on where you start.
If you have 12–24 months before listing, six preparation moves are most likely to lift your final sale price. None of them require you to grow rapidly — they are operational improvements that eliminate the discount buyers would otherwise apply. Most owners who execute all six move from the low end of the industry multiple to the median, which on a $2M business is a $400K–$800K swing.
Use your industry as the primary anchor from the BizBuySell 2025 Insight Report (4,847 closed transactions) and IBBA Market Pulse Q1 2026. Rule of thumb by deal size: businesses under $2M should use SDE-based multiples (median ~2.5× SDE across all industries); businesses $2M–$10M use EBITDA multiples (3–7× EBITDA by industry); businesses above $10M use a blend of EBITDA and DCF. Within your industry, three factors most strongly adjust the multiple: (1) recurring revenue above 50% adds 0.5–1.0×, (2) single customer >20% of revenue discounts 15–25%, and (3) a documented GM in place adds 0.5–1.0×. When in doubt, present a low/mid/high range with the industry median at the mid point — any sophisticated buyer will do the same.
Service businesses (consulting, agencies, professional services) are valued primarily on profit — SDE or EBITDA — because their value is embedded in the owner's expertise and client relationships rather than physical assets. The Income Approach (SDE/EBITDA multiple) typically dominates for service businesses (60–80% of final value). Product businesses (manufacturing, e-commerce, retail) carry hard assets that provide a valuation floor independent of profit — the Asset Approach adds a meaningful floor for product businesses that can be liquidated in a distress sale. E-commerce businesses fall in between: buyers weight revenue multiple for top-line brands and EBITDA for profit-focused operators. The three-approach calculator above handles both by showing Income, Market, and Asset values simultaneously.
Minimum documents: (1) three years of P&L statements or tax returns (Schedule C for sole props, 1120S/1065 for corporations), (2) current balance sheet (equipment, receivables, payables, debt), (3) last 12 months of bank statements to verify cash flow, (4) a complete add-back list (owner salary, benefits, one-time expenses, depreciation) if computing SDE. For a formal appraisal or lender package add: 3 years of filed tax returns, existing lease and vendor contracts, customer list with revenue concentration, employee roster with compensation, and any IP or licensing agreements. Lenders require 3 years of tax returns; buyers running a quality-of-earnings review need the same plus underlying financials. Organize these 12–18 months before listing — missing documents are the most common cause of delayed closings.
An online business valuation calculator is accurate to within 15–25% of a formal appraisal when: (1) you enter verified financials (not estimated), (2) you select the correct industry, and (3) your business is close to industry-average in terms of growth, profitability, and risk profile. It is less accurate for businesses with unusual customer concentration, complex owner compensation structures, or significant intangible assets (patents, proprietary technology) not captured in revenue or EBITDA. A formal appraisal ($2,500–$7,500) is warranted when you need to present a defensible number to a lender, multiple co-founders, or a sophisticated strategic acquirer. For initial planning and broker conversations, an online calculator range is sufficient and widely accepted — most brokers do the same calculation manually when giving a preliminary opinion of value.
SDE (Seller's Discretionary Earnings) is the figure used to value owner-operated businesses under roughly $5M in sale price. It starts with net profit, then adds back the owner's salary, benefits, personal expenses run through the business, depreciation, and other discretionary add-backs. The result is the total economic benefit a single full-time owner would receive — i.e. what the buyer can pay themselves after acquisition. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a cleaner operating-profit number, used by private equity, strategic acquirers, and lenders evaluating businesses above $5M. EBITDA strips out owner-specific compensation and assumes a professional manager is already in place. For a sub-$5M business, SDE typically runs 1.3–2.0× EBITDA because the owner's salary and discretionary spending are both added back. Per IRS Publication 544 (Sales of Business Property), the SDE/EBITDA distinction matters because buyers and lenders will discount your valuation if you present the wrong metric for your deal size.
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