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Business Valuation Calculator

Updated Nov 12, 2026 By Infinity Calculator Formulas Sources
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Live Consensus Estimate $0 – $0
Core Financials
$
$
Include your own salary in this figure.
$
$
Three-Year SDE Financials (SDE = Sales − COGS − OpEx + Add-Backs)
Line Item Year Year Year
Business Profile
%
%
Earnings Trend Assessment
Recurring Revenue %
Customer Concentration (Top 5)
Highly Regulated Industry?
Risk Factors (stackable discounts)
Risk Deductions: −0.00x
Upside Factors (stackable premiums)
Upside Premiums: +0.00x
Running Multiple: —
Valuation Parameters
Level of Risk (DCF Discount Rate)
Applied Discount Rate: 10.0%
%
Owner's Future Involvement
$
Consensus Estimated Market Value
$0 – $0
Weighted consensus across all three methods
SDE Earnings Multiple
$0
Applies your adjusted weighted SDE to an industry multiple tuned by risk/upside factors.
Multiple: —
Discounted Cash Flow
$0
Discounts projected future earnings to today's value using your risk-based rate.
Discount Rate: —
Revenue & Profit Multiple
$0
Applies industry revenue and profit multiples across three scenarios.
Multiples: —
Valuation Range
Revenue Multiple
—
SDE / Profit Multiple
—
Applied Discount Rate
—
Three-Scenario Detail
ScenarioSDE MultipleDCFRevenue/Profit
Net Multiple Adjustment Breakdown
Sensitivity Analysis
VariableDownsideConsensus MidUpside
Step-by-Step Solution
Your Inputs

Introduction

This free business valuation calculator helps you find out how much your business is worth. It uses three methods: the SDE earnings multiple, discounted cash flow (DCF), and revenue and profit multiple methods. Each method looks at your business from a different angle, then the tool blends them into one consensus estimate you can trust.

Just enter your revenue, profit, earnings, and a few details about your business. The calculator does the rest. It adjusts your valuation based on your industry, growth trend, customer concentration, recurring revenue, risk factors, and more. You get a full range of values, from conservative to optimistic, along with step-by-step math, sensitivity analysis, and visual charts that show exactly how your number was built.

Whether you plan to sell your business, bring on a partner, apply for a business loan, or simply want to know where you stand, this tool gives you a clear starting point. No guesswork. No jargon. Just a straightforward estimate, with every step of the math shown.

How to Use Our Business Valuation Calculator

Enter your business's financial details, industry, and risk profile below. The calculator will estimate your business's market value using three methods: SDE Earnings Multiple, Discounted Cash Flow (DCF), and Revenue & Profit Multiple. A weighted consensus range combines all three into one final estimate.

Core Financials

Last 12 Months Revenue: Enter the total money your business brought in over the past 12 months before any costs are taken out.

Last 12 Months Net Profit (Before Tax): Enter your business's profit over the past 12 months before taxes. Include your own salary in this number.

Annual Earnings (EBITDA): Enter your earnings before interest, taxes, depreciation, and amortization. If you are not sure, start with your net profit number.

Excess / Above-Market Owner Comp Add-Back: Enter the amount of your pay that is above what a hired manager would earn for the same job. This gets added back to normalize your earnings. Enter $0 if your pay matches the market rate.

Three-Year SDE Financials Table: Fill in your Sales, Cost of Goods Sold, Operating Expenses, Officer Salaries, Depreciation, Interest Expense, and Other Add-Backs for each of the last three years. The calculator uses these to find your Seller's Discretionary Earnings (SDE) and weights recent years more heavily.

Business Profile

Industry: Search for or select the industry that best matches your business. This is one of the most important inputs because each industry has its own set of valuation multiples.

3-Year Annual Profit Growth Rate: Enter the average yearly rate your profit grew over the last three years. Use a negative number if profits shrank.

Anticipated Future Earnings Growth: Enter the yearly growth rate you expect going forward. Use 0% if you think earnings will stay flat.

Earnings Trend Assessment: Pick the option that best describes your earnings direction. The calculator will suggest a trend based on your SDE table, but you make the final choice. Growing trends raise your multiple; declining trends lower it.

Recurring Revenue %: Select how much of your revenue comes from subscriptions, retainers, or long-term contracts. More recurring revenue means more predictable income, which raises your valuation.

Customer Concentration (Top 5): Select the share of revenue that comes from your five biggest customers. High concentration means more risk for a buyer, which lowers your value.

Highly Regulated Industry: Choose "Yes" if your business operates in a heavily regulated field like healthcare, finance, or cannabis. This lowers your multiple and raises your risk tier.

Risk Factors: Check any boxes that apply to your business. Each checked risk subtracts from your valuation multiple. You can select more than one, and the deductions stack.

Upside Factors: Check any boxes that apply. Each checked upside adds to your valuation multiple. These also stack, so select all that are true for your business. For example, if your business qualifies for SBA loan financing, that makes it more attractive to buyers and adds a premium.

Valuation Parameters

Level of Risk (DCF Discount Rate): Pick the overall risk level of your business. Higher risk uses a higher discount rate, which lowers your DCF value. "Average" at 10% is the default.

Years of Earnings Expected to Continue: Enter how many years you expect the business to keep earning at its current level. At 10 years, the calculator applies a perpetuity formula, which assumes earnings continue indefinitely.

Discount for Lack of Marketability: Enter a percentage to account for how hard it may be to sell a private business. The calculator applies it to the DCF method's value. The default is 22%. A positive number lowers that value, and a negative number raises it.

Owner's Future Involvement: Select what the owner plans to do after the sale. Staying on with equity reduces buyer risk and raises the value. Leaving with no transition plan increases risk and lowers the value.

Cost to Replace the Owner (Market Manager Salary): Enter the yearly salary it would cost to hire someone to do the owner's job. This amount is subtracted from your weighted SDE before the multiple is applied.

Once all fields are filled in, click Calculate to see your results. Click Reset to clear everything and start over.

What Is a Business Valuation?

A business valuation is an estimate of how much a business is worth. Buyers, sellers, investors, and lenders all use it to agree on a fair price. If you own a business and want to sell it, retire, bring in a partner, or get a loan, you need to know its value.

How This Calculator Works

This calculator uses three methods to estimate your business value:

  • SDE Earnings Multiple: Takes your Seller's Discretionary Earnings (the real cash flow available to an owner) and multiplies it by a number based on your industry. A coffee shop and a software company get different multiples because buyers pay more for certain types of businesses.
  • Discounted Cash Flow (DCF): Looks at the money your business is expected to earn in the future, then discounts it back to what that money is worth today using present value concepts.2 Riskier businesses get a bigger discount.3
  • Revenue & Profit Multiple: Applies industry multiples to both your revenue and profit, then averages them to find a middle ground.

The calculator blends all three methods into a single consensus range so you get a balanced estimate, not just one point of view.

What Affects Your Business Value

Several factors push your valuation up or down:

  • Industry: Each industry has its own range of multiples. Tech companies sell for higher multiples than restaurants.
  • Earnings trend: Growing profits raise your value. Shrinking profits lower it.
  • Recurring revenue: Subscriptions and contracts make income more predictable, which lowers the risk a buyer takes on.
  • Customer concentration: If most of your revenue comes from a few customers, losing one of them would cut revenue sharply, which is a risk for a buyer.
  • Owner dependency: A business with a plan to keep running after the owner leaves is worth more than one without.5
  • Years in operation: A longer history gives a buyer more past results to judge the business by.

Key Terms to Know

  • SDE (Seller's Discretionary Earnings): Your revenue minus costs, plus add-backs like the owner's salary, depreciation, and interest. It shows the true earning power of the business.
  • EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization.1 It starts from net income and adds back interest, taxes, depreciation and amortization.1 It is used most often when larger businesses are sold.
  • Multiple: The number applied to your earnings to calculate value. A 3x multiple on $500,000 in earnings means the business is worth roughly $1,500,000.
  • Discount Rate: The rate used in the DCF method to account for risk. Higher risk means a higher rate and a lower valuation.3
  • Marketability Discount: A reduction applied because private businesses are harder to sell than public stocks.
  • Net Present Value (NPV): A closely related concept to DCF: the present value of the cash coming in minus the present value of the cash going out.3 Understanding NPV helps you interpret how the DCF method arrives at its valuation figure.
  • Return on Investment (ROI): A measure of how much profit an investment generates relative to its cost. Buyers often look at the return they expect to earn on their investment before agreeing on a price.

This calculator gives you a solid starting point. For a formal valuation used in legal or financial transactions, work with a certified business appraiser.

Formulas used

Seller's Discretionary Earnings (SDE) per Year
\text{SDE}_y = \text{Sales} - \text{COGS} - \text{OpEx} + \text{Officer Salaries} + \text{Depreciation} + \text{Interest} + \text{Other Add-Backs}
Weighted Average SDE
\text{SDE}_{wtd} = \text{SDE}_{Y_1} \times 0.50 + \text{SDE}_{Y_2} \times 0.30 + \text{SDE}_{Y_3} \times 0.20
Adjusted SDE (subtract manager replacement salary)
\text{SDE}_{adj} = \text{SDE}_{wtd} - S_{manager}
SDE Earnings Multiple Valuation
V_{SDE} = \max(0,\; \text{SDE}_{adj}) \times \max\left(0.5,\; M_{base} + \Delta_{trend} + \Delta_{recurring} + \Delta_{concentration} + \Delta_{regulated} + \Delta_{risk} + \Delta_{upside} + \Delta_{owner} \right)
Discounted Cash Flow — Gordon Growth Perpetuity (years = 10)
V_{DCF} = \frac{E_0\,(1 + g')}{r - g'} \times \left(1 - \frac{d_m}{100}\right), \quad g' = \max\big(-0.9,\; \min(g,\; r - 0.005)\big)
Discounted Cash Flow — Finite Horizon (years < 10)
V_{DCF} = \left( \sum_{t=1}^{N} \frac{E_0\,(1+g)^{t}}{(1+r)^{t}} \right) \times \left(1 - \frac{d_m}{100}\right)
Revenue & Profit Multiple Method
V_C = \max\!\left(0,\; \frac{1}{2}\left( \text{Revenue} \times M_{rev} + \text{Net Profit} \times M_{sde} \right) \times \left(1 + \frac{\operatorname{clamp}(g_h,\; -40,\; 60)}{200}\right)\right)
Weighted Consensus Estimate
V_{consensus} = 0.40 \times V_{SDE} + 0.35 \times V_C + 0.25 \times V_{DCF}

Frequently asked questions

What is the difference between SDE and EBITDA?

SDE includes the owner's salary, perks, and personal expenses added back in. It shows the total cash a single owner-operator can take home. EBITDA does not add back the owner's salary. It starts from net income and adds back interest, taxes, depreciation and amortization.1 Small businesses with one owner typically use SDE. Larger businesses with a management team typically use EBITDA.

Why does the industry I pick change my valuation so much?

Each industry has its own range of valuation multiples. Software companies, for example, sell for higher multiples than restaurants. The industry you choose sets the base multiple that every other adjustment builds on, so it has a large effect on your final number.

What are add-backs and why do they matter?

Add-backs are personal expenses the owner runs through the business, and owner pay above what it would cost to hire someone for the same work, which a new buyer would not have. Examples include above-market salary, personal car payments, and family member salaries for no-show jobs.5 Adding these back raises your SDE, which raises your valuation.

What is a good valuation multiple for a small business?

There is no single number. Businesses with steady, growing earnings and a plan to carry on without the owner are worth more than owner-dependent ones with uneven earnings. The right multiple depends on your industry, growth, risk, and how dependent the business is on the owner.

What does the discount for lack of marketability mean?

Private businesses are harder to sell than public company stocks. You cannot list them on an exchange and find a buyer in seconds. The calculator applies this discount to the DCF method's value to account for that difficulty. The default is 22%. For comparison, an IRS valuation job aid notes that restricted stock studies show average means and medians of 31.4% and 33%, and that many analysts use a discount of about 35%.4 Those studies compare a company's shares that cannot be freely sold for a year or two with its shares that trade freely. The job aid also says more recent studies found smaller discounts than older ones, and that applying this discount to a controlling interest, such as a whole business, is disputed. Some valuers think it should be little or none, and most agree it should be smaller than for a minority stake.4 If your business is in high demand or easy to transfer, you can lower it.

How does owner involvement affect the valuation?

If the owner plans to stay on and keep equity, buyers see less risk because the person who built the business is still involved. That raises the value. If the owner leaves right away with no transition plan, buyers face more uncertainty, which lowers the value. The transition plan you choose adjusts both your valuation multiple and your risk level.

What is the manager replacement salary and why is it subtracted?

This is the yearly cost to hire someone to do the owner's job. It gets subtracted from your weighted SDE because a buyer who does not plan to run the business daily will need to pay a manager. Removing this cost shows the true profit left over after replacing the owner, which is what a buyer actually earns.

What discount rate should I use?

The default is 10%, labeled "Average." Discount rates are usually higher for a private buyer who will have much of their wealth in this one business than for a large public company buyer.5 Use a lower rate if your business has very predictable cash flow, long contracts, and low risk. Use a higher rate if your business has unstable revenue, high customer concentration, or operates in a volatile industry. The calculator will also bump your rate up one tier automatically if you flag your industry as highly regulated.

Can I value a business that is losing money?

You can enter negative net profit. Any method that comes out below zero counts as zero, so the estimate never shows a negative value. A money-losing business may still have value based on its assets, brand, or customer base, which this calculator does not measure. In that case, an asset-based appraisal or strategic buyer analysis would be more useful.

Why does recurring revenue increase my valuation?

Recurring revenue from subscriptions, retainers, or contracts is more predictable than one-time sales. Buyers know that money will likely keep coming in after the sale closes. That predictability lowers risk and makes the business worth more. The higher your recurring revenue percentage, the bigger the premium added to your multiple.

Sources

  1. Non-GAAP Financial Measures: Compliance and Disclosure Interpretations. U.S. Securities and Exchange Commission, Division of Corporation Finance. Question 103.01. Accessed September 27, 2026.
  2. Dahlquist J, Knight R. Principles of Finance 2e, 11.3 Discounted Cash Flow (DCF) Model. OpenStax. 2026;Section 11.3. Accessed September 27, 2026.
  3. Dahlquist J, Knight R. Principles of Finance 2e, 16.2 Net Present Value (NPV) Method. OpenStax. 2026;Section 16.2. Accessed September 27, 2026.
  4. Discount for Lack of Marketability: Job Aid for IRS Valuation Professionals. Internal Revenue Service. 2009;Restricted Stock Studies. Accessed October 8, 2026.
  5. Damodaran A. Investment Valuation, second edition, Chapter 24: Valuing Private Firms. John Wiley and Sons. pp. 8-9, Adjusting for Non-Diversification; pp. 16-17, owner salaries and personal expenses; p. 22; p. 30. Accessed November 12, 2026.

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