Business Valuation Calculator

Small businesses typically valued 2–5x SDE; service businesses lower, recurring revenue higher.

Annual SDE

Industry multiple

Add backs

Discount for risk %

Indicated value

$1,275,000

Adjusted SDE

$425,000

Low end value

$1,062,500

How the math works

Adjusted SDE = SDE + add-backs. Value = SDE × multiple × (1 − risk discount).

($350k + $75k) × 3 = $1.275M indicated value. Low end (×2.5) = $1.0625M.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

Calculation notes and example

Business valuation formula used here

A simple business valuation multiplies normalized earnings by an assumed market multiple. Depending on the business, the earnings base may be seller discretionary earnings, EBITDA, or another cash-flow measure. The calculator keeps the multiple visible because a small change in multiple can move valuation more than a small change in earnings, especially for larger businesses.

Worked example

If normalized SDE is $350,000 and the market multiple is 3.0×, the indicated value is $1,050,000 before adjustments for cash, debt, working capital, or unusual assets. At 2.5×, value falls to $875,000. That sensitivity is why buyers should compare SDE vs EBITDA and acquisition loan capacity before assuming the asking price can be supported by debt.

Edge cases and practical tips

Normalize one-time expenses, owner add-backs, and nonrecurring revenue before applying a multiple.
A valuation estimate is not a quality-of-earnings review or appraisal.
Debt, excess cash, inventory, and working capital targets can change the final purchase price.

Useful companion tools: Business Acquisition Loan Calculator, SDE vs EBITDA Calculator, Exit Multiple Calculator, and SBA 7(a) Loan Calculator.

How to interpret the business valuation result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this business valuation estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter annual sde.
Enter industry multiple.
Enter add backs.
Enter discount for risk %.
Read indicated value.

Frequently Asked Questions

Small business valuation multiples?

SDE (seller's discretionary earnings) multiples: service business 1.5–3.0x, retail 2–4x, manufacturing 2.5–4.5x, restaurant 1.5–2.5x, e-commerce 2.5–4.0x, SaaS 4–10x ARR. EBITDA multiples: $1M–5M EBITDA businesses 4–7x. Larger ($5M+ EBITDA) 6–10x+. Recurring revenue, owner-independence, growth, customer concentration drive multiple. Asset-based: book value floor for asset-heavy businesses. Income approach: DCF for predictable cash flow. Market approach: comparables.

How does this fit small business finance?

Small business owners use this calculator alongside cash flow forecast, P&L, balance sheet, and tax projection. Pair with industry benchmark data (RMA, BizMiner, IBISWorld). Decision framework: ROI > capital cost + risk premium > minimum threshold for owner time. Single calculator output is one input — owner intuition + market knowledge + financial discipline complete the picture.

SBA financing fit?

SBA 7(a): up to $5M, working capital, equipment, real estate, business acquisition, longer terms. SBA 504: real estate + equipment, fixed rate, 10–25 years. SBA Express: up to $500k, faster. SBA Microloan: up to $50k. Owner-occupied real estate (51%+ owner use) qualifies. Personal guarantee required. SBA fees: 2–3.75% of guaranteed portion.

When is this worth pursuing?

Small business decisions weighing capex, hiring, expansion, financing should consider: ROI threshold (typically 20%+ for owner risk), payback period (under 3 years preferred), cash flow coverage, opportunity cost vs alternatives. Calculator outputs inform but don't decide — owner judgment about market, competition, and execution capacity is what makes the call.