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Business & StartupValuation Multiple

Business Valuation Calculator

Estimate small business and middle-market enterprise valuation ranges using Seller's Discretionary Earnings (SDE), EBITDA, or revenue multiples.

Earnings & Multiple Framework

Market Multiple Business Valuation Formula

Estimated Business Value = Baseline Financial Metric (SDE, EBITDA, or Revenue) × Selected Valuation Multiple
  • Seller's Discretionary Earnings (SDE): Pre-tax net profit + owner salary + discretionary perks (standard for businesses under $5M revenue).
  • EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization (standard for businesses with over $2M-$5M in earnings).
  • Market Range: Baseline valuation with ±15% sensitivity band reflecting company-specific risk factors.

Step-by-Step Worked Example

Scenario: Valuing a mature service company with $250,000 in annual SDE applying a 4.0x multiple

Calculation Steps:

  1. Baseline Financial Metric = $250,000
  2. Applied Valuation Multiple = 4.00x
  3. Estimated Business Valuation = $250,000 × 4.00 = $1,000,000
  4. Valuation Range (±15%) = $850,000 (Low) to $1,150,000 (High)
Result: Estimated business valuation is $1,000,000 (with an estimated fair market value range of $850,000 to $1,150,000).

How to Use This Calculator

  1. 1Enter annual gross revenue and normalized annual earnings (SDE or EBITDA).
  2. 2Select your preferred valuation method.
  3. 3Enter an appropriate market multiple (typically 2.0x to 4.5x for SDE, or 4.0x to 8.0x for EBITDA).

Assumptions & Limitations

  • Valuation multiple methodology provides an initial estimate, not a certified ASA or AICPA appraisal.
  • Earnings are normalized to exclude non-recurring owner personal expenses.

Frequently Asked Questions

What is the difference between SDE and EBITDA in business valuation?

SDE (Seller's Discretionary Earnings) includes one owner-operator's full compensation and is used for small businesses bought by an owner-operator. EBITDA assumes professional management is already in place.

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