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Business Valuation Calculator

Updated Jul 17, 2026 By Jehan Wadia
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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 · Best method: —
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 proven methods used by real buyers, sellers, and financial experts: 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 based on the same formulas professionals use every day.

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 proven 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 the single most important input 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. If you need help calculating this figure, try our CAGR calculator to find the compound annual growth rate from your historical earnings.

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. You can also use our year over year growth calculator to measure the exact change between periods.

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. Understanding the lifetime value of each recurring customer through a customer lifetime value calculator can further support your valuation case.

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 for most small businesses. For a deeper understanding of how discount rates are determined in corporate finance, see our WACC calculator.

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 default is 22%. A positive number lowers the value; 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. Our salary calculator can help you research competitive compensation for this role.

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 proven 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. Riskier businesses get a bigger discount. You can explore the underlying math further with our dedicated DCF calculator.
  • Revenue & Profit Multiple: Applies industry-standard 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: This is the biggest factor. 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 predictable, which buyers love.
  • Customer concentration: If most of your revenue comes from a few customers, that's risky for a buyer.
  • Owner dependency: A business that runs without the owner is worth more than one that can't.
  • Years in operation: A longer track record gives buyers more confidence.

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. A standard measure of operating profit used in most business sales.
  • 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.
  • 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 that sums all discounted future cash flows. 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 compare a business's expected ROI against other investment options before agreeing on a price.

This calculator gives you a solid starting point. Once you know your estimated value, tools like the break even calculator and margin calculator can help you strengthen the financial story behind your business. 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 \left( 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)
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 = \frac{1}{2}\left( \text{Revenue} \times M_{rev} + \text{Net Profit} \times M_{sde} \right) \times \operatorname{clamp}\!\left(1 + \frac{g_h}{200},\; 0.6,\; 1.4\right)
Weighted Consensus Estimate
V_{consensus} = 0.40 \times V_{SDE} + 0.35 \times V_C + 0.25 \times V_{DCF}

Frequently asked questions

Is this business valuation calculator free to use?

Yes. This business valuation calculator is 100% free. There are no sign-ups, no hidden fees, and no limits on how many times you can run it.

How accurate is this business valuation calculator?

This tool gives you a solid estimate based on the same three methods professionals use. However, it is not a formal appraisal. Real-world deal prices depend on factors like negotiation, market timing, and buyer interest that no calculator can capture. Use this as a starting point, then hire a certified appraiser if you need a number for legal or financial purposes.

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 measures operating profit the way larger companies report it. 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 set of valuation multiples based on real market data from actual business sales. A SaaS company sells for a higher multiple than a restaurant because buyers see more predictable revenue, higher margins, and easier scaling. The industry you choose sets the base multiple that every other adjustment builds on, so it has the biggest impact on your final number.

What are add-backs and why do they matter?

Add-backs are personal or one-time expenses the owner runs through the business that a new buyer would not have. Examples include above-market salary, personal car payments, one-time legal fees, and family member salaries for no-show jobs. Adding these back raises your SDE, which raises your valuation. Buyers and appraisers expect to see documented add-backs in any sale.

What does the weighted consensus estimate mean?

The consensus estimate blends all three valuation methods into one range. It gives 40% weight to the SDE multiple method, 35% to the revenue and profit multiple method, and 25% to the DCF method. This blend prevents any single method from skewing your result and gives you a more balanced picture of what your business is worth.

Why is there a range instead of one exact number?

No business has one fixed price. The range shows you a conservative (low), realistic (mid), and optimistic (high) estimate. Where your business falls in that range depends on negotiation, buyer demand, deal structure, and timing. The range helps you set realistic expectations for both a floor and a ceiling.

What is a good valuation multiple for a small business?

Most small businesses sell for 2x to 4x their SDE. Highly profitable businesses in strong industries like software or healthcare can reach 5x to 6x or more. Low-margin businesses like restaurants or gas stations often fall between 1.5x and 2.5x. 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. This discount reduces your valuation to account for that difficulty. The default is 22%, which is a common rate used by appraisers. 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," which works for most stable small businesses. 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.

What happens when I set years of earnings to 10?

At 10 years, the calculator switches to a perpetuity formula called the Gordon Growth Model. It assumes your business will keep earning cash flow forever, growing at the future growth rate you entered. This gives a higher value than a shorter time horizon because it captures the long-term earning power of the business.

Can I value a business that is losing money?

You can enter negative net profit, but the calculator will floor certain values at zero to avoid meaningless results. A money-losing business may still have value based on its revenue, assets, brand, or customer base, but those factors go beyond what an earnings-based calculator can measure. In that case, an asset-based appraisal or strategic buyer analysis would be more useful.

What does the sensitivity analysis table show?

It shows how your consensus value changes when one key input moves up or down while everything else stays the same. For example, it tests what happens if your EBITDA rises or falls by 10%, or if the discount rate shifts by 2.5%. This helps you see which inputs have the biggest impact on your valuation and where uncertainty matters most.

How do risk and upside factors stack?

Each risk factor you check subtracts from your valuation multiple, and each upside factor adds to it. They all stack together. For example, if you check two risk factors totaling −0.55x and two upside factors totaling +0.55x, they cancel out and your net adjustment is zero. The calculator will never let your final multiple drop below 0.5x, even if your deductions are very large.

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.

Can I use this calculator to value a startup?

You can, but the results may not be reliable. Startups often have little or no earnings history, which makes earnings-based methods less useful. If your business is under one year old, the calculator applies a steep risk deduction of −0.5x and disables the 10+ years premium. For very early-stage companies, investors typically use other methods like comparable funding rounds or discounted future projections that go beyond this tool.

How is the three-year SDE weighted?

The most recent year gets 50% weight, the year before gets 30%, and the oldest year gets 20%. This puts more emphasis on current performance while still accounting for trends over time. If your earnings improved recently, the weighting works in your favor. If they declined, it will pull your valuation down.

Should I use this valuation to set my asking price?

Use it as a strong starting point, not the final word. Real deal prices also factor in assets, liabilities, deal structure, earnouts, and how many buyers are competing. Many sellers list 10% to 20% above their mid estimate to leave room for negotiation. For a sale involving significant money, get a professional appraisal to back up your asking price.

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