SeeCalcSeeCalc

Business Valuation Calculator

Estimate what your business is worth using the SDE multiple, EBITDA multiple, revenue multiple, or asset-based (book value) method. Instant results with formula breakdown.

Author: Naeem Ullah
•Last Updated: July 7, 2026•
Rate this tool
Active Calculation FormulaBusiness Value = SDE × Industry Multiple

Adjust Variables

USD
$
sde
Min: $0Max: $5.0M
x
sdeMultiple
Min: 0.1 xMax: 10 x
Use Real Campaign Presets
Real-Time ResultsUSD
Business Value (SDE Method)$0
All calculations are compiled with double-precision floating math directly in this browser frame. Perfect precision guaranteed.

Interactive Step-by-Step Calculation Proofs

View how variables resolve algebraically down to peer-reviewed standard outputs.

Why Use This Calculator

Business valuation estimates what a business is worth, typically for a sale, acquisition, partner buyout, or estate planning purposes. There's no single 'correct' method — different approaches suit different business sizes and situations, so professional valuations often triangulate across several. For small, owner-operated businesses, the most common approach is the SDE multiple method: Business Value = Seller's Discretionary Earnings × Industry Multiple, where SDE is the total financial benefit a single owner-operator gets from the business (net profit plus owner's salary, benefits, and other add-backs). Larger or more institutionally run businesses more often use an EBITDA multiple instead. When profits are inconsistent or the business is pre-profit, a revenue multiple is sometimes used as a rough proxy. The asset-based (book value) method — Total Assets minus Total Liabilities — provides a balance-sheet floor value, most relevant for asset-heavy or distressed businesses. This calculator covers all four methods. Multiples vary enormously by industry, growth rate, customer concentration, and owner dependence — treat the results here as a starting estimate, not a substitute for a professional valuation. Pair it with the GMROI calculator and break-even calculator for a fuller financial picture before valuing a business.

Mathematical Formula Explanation

Calculated standard benchmarks are based on direct functional dependencies. The primary calculation logic follows this formula:

Business Value = Seller's Discretionary Earnings (SDE) × Industry Multiple

SDE Multiple, EBITDA Multiple, and Revenue Multiple all apply the identical operation — a profitability or revenue figure multiplied by an industry multiple — but each uses a different base figure appropriate to a different business size or profitability profile, and the multiples themselves aren't interchangeable across methods. Asset-Based (Book Value) Method is a completely different calculation with no multiple at all: it simply subtracts liabilities from assets, producing a balance-sheet floor value independent of earnings.

Worked Examples (Step-by-Step)

These examples show a small owner-operated business valued by its SDE multiple, a larger business valued by its EBITDA multiple, and a business's asset-based book value.

Case Scenario 1

Example 1: SDE Multiple Valuation

“A small owner-operated retail business has $300,000 in Seller's Discretionary Earnings, and comparable businesses in its industry sell for around a 3.0x SDE multiple. What is the estimated business value?”

Given Inputs
  • SDE: 300,000
  • SDEMULTIPLE: 3
Computed Outputs
  • VALUESDE: 900,000
Case Scenario 2

Example 2: EBITDA Multiple Valuation

“A larger, professionally managed business has $500,000 in EBITDA, and its industry typically trades at a 4.0x EBITDA multiple. What is the estimated business value?”

Given Inputs
  • EBITDA: 500,000
  • EBITDAMULTIPLE: 4
Computed Outputs
  • VALUEEBITDA: 2,000,000
Case Scenario 3

Example 3: Asset-Based Valuation

“A business has $800,000 in total assets and $300,000 in total liabilities. What is its book value?”

Given Inputs
  • TOTALASSETS: 800,000
  • TOTALLIABILITIES: 300,000
Computed Outputs
  • VALUEASSET: 500,000

Frequently Asked Questions (FAQ)

There is no single formula — valuation depends on the method used. The most common approaches are: SDE multiple (Value = SDE × Multiple) for small owner-operated businesses, EBITDA multiple (Value = EBITDA × Multiple) for larger businesses, revenue multiple (Value = Revenue × Multiple) when profits are inconsistent, and asset-based (Value = Total Assets − Total Liabilities) as a balance-sheet floor. Most professional valuations consider more than one method and reconcile the results.

SDE is the total financial benefit a single full-time owner-operator receives from the business — it starts with net profit and adds back the owner's salary, personal benefits, one-time expenses, and other discretionary items. It's used for small businesses because a single owner's compensation is often blended into the business's expenses in ways that obscure true profitability; SDE normalizes this so buyers can compare businesses on a like-for-like basis.

Small, owner-operated businesses (often under $1–5M in revenue) commonly sell for roughly 2x to 4x SDE, with the exact multiple depending on industry, growth trends, customer concentration, how dependent the business is on the current owner, and overall risk. Businesses that could run smoothly without the owner's daily involvement, with strong recurring revenue and diversified customers, tend to command higher multiples within that range.

SDE is used for small, owner-operated businesses and includes the owner's full compensation and benefits as if the business had no paid manager. EBITDA is used for larger, more institutionally run businesses that already pay market-rate management salaries — it doesn't add back owner compensation the way SDE does, since a professional manager's salary is treated as a real operating cost. As businesses grow past roughly $1–5M in revenue and add professional management, valuations typically shift from SDE-based to EBITDA-based multiples.

Business Value = Annual Revenue × Industry Revenue Multiple. Revenue multiples are used mainly when profitability is inconsistent, negative, or not yet meaningful (such as early-stage or high-growth companies), since revenue is harder to manipulate and available even without profit. Revenue multiples vary enormously by industry — often under 1x for many low-margin service businesses, but several times revenue for high-growth SaaS or other high-margin, scalable models.

Asset-based valuation calculates Total Assets minus Total Liabilities — essentially the business's net worth on paper. It's most relevant for asset-heavy businesses (real estate, equipment-intensive operations), holding companies, or businesses being liquidated or in distress, where earnings-based methods may understate or fail to capture value. For a healthy, profitable operating business, asset-based value is typically a floor — below what an SDE, EBITDA, or revenue multiple would suggest.

Run your numbers through whichever method fits your business best — SDE multiple for a small owner-operated business, EBITDA multiple for a larger professionally managed one, revenue multiple if profit is inconsistent, or asset-based as a floor check — and compare the results. Many owners find it useful to calculate two or three methods and use the range (rather than a single number) as a starting estimate, then refine it with industry-specific comparable sale data or a professional valuation.

Key drivers include: growth rate and trend (growing businesses command higher multiples), owner dependence (a business that runs without the owner is worth more than one that can't), customer concentration (a diversified customer base reduces risk), recurring vs. one-time revenue, industry and competitive position, quality of financial records, and overall market conditions for buyers and financing at the time of sale.

For an initial estimate, planning purposes, or a sanity check, a multiple-based calculator like this one is a reasonable starting point. For an actual sale, partner buyout, divorce or estate proceeding, litigation, or any situation with legal or tax consequences, a certified business appraiser or M&A advisor should perform a formal valuation — they can access comparable transaction databases, apply appropriate discounts/premiums, and produce a defensible report that a simple multiple calculation cannot.

Sources & Methodology

Related Decision Tools

GMROI Calculatorgmroi-calculator
Break-Even Calculatorbreak-even-calculator
Business Budget Calculatorbusiness-budget-calculator
Payback Period Calculatorpayback-period-calculator