Business Valuation Calculator

How to Use This Tool

Follow these steps to get an accurate business valuation estimate:

1. Select your preferred valuation method from the dropdown. Small businesses and e-commerce stores typically use the SDE Multiple method.
2. Enter your annual revenue for the last 12 months in USD.
3. Fill in the required fields for your chosen method: SDE or EBITDA for multiple methods, discount/growth rates for DCF, or assets/liabilities for asset-based.
4. Select your industry to auto-populate a standard valuation multiple, or adjust the multiple manually to match your market.
5. Click the Calculate button to view your estimated valuation, range, and key metrics.
6. Use the Reset button to clear all fields and start over, or the Copy button to save your valuation result.

Formula and Logic

This calculator uses four industry-standard business valuation methods:

SDE Multiple Method

Valuation = Seller’s Discretionary Earnings (SDE) × Industry Multiple. SDE includes net profit plus owner’s salary, benefits, and non-recurring expenses. This is the most common method for small businesses and e-commerce operations.

EBITDA Multiple Method

Valuation = EBITDA × Industry Multiple. EBITDA measures operating profitability by excluding interest, taxes, depreciation, and amortization. This method is preferred for larger, established businesses.

Discounted Cash Flow (DCF) Method

Valuation = Sum of discounted future cash flows over 5 years + terminal value. This method accounts for expected business growth and the time value of money, using your entered discount (WACC) and growth rates.

Asset-Based Valuation

Valuation = Total Business Assets − Total Liabilities. This method is used for asset-heavy businesses or companies with low profitability, valuing the company based on its net tangible assets.

Practical Notes

Keep these business-specific factors in mind when interpreting your results:

• Valuation multiples vary by industry: e-commerce typically ranges 2–4x SDE, retail 1–3x, and service businesses 1.5–3x.
• SDE should include all owner-related perks (salary, travel, personal expenses run through the business) to reflect true cash flow to a buyer.
• DCF results are highly sensitive to discount and growth rate inputs: use a 10–20% discount rate for small businesses, and 5–15% for established operations.
• Asset-based valuations do not account for intangible assets like brand equity, customer lists, or intellectual property, which may add significant value.
• Always consult a certified business appraiser for formal valuations used in legal or high-stakes sale processes.

Why This Tool Is Useful

Business owners need reliable valuation estimates for multiple real-world scenarios:

• Preparing to sell the business to a third party or strategic buyer.
• Seeking outside investment or venture capital funding.
• Assessing the value of the business for partnership changes or divorce settlements.
• Tracking business growth year-over-year to measure operational improvements.
• Setting employee stock option pool (ESOP) values or equity compensation terms.

Frequently Asked Questions

What is the difference between SDE and EBITDA?

SDE adds back owner’s salary, benefits, and discretionary expenses to net profit, reflecting the total cash flow available to a new owner. EBITDA excludes these owner-specific expenses and focuses on core operating profitability, making it better for larger businesses with professional management.

How do I find the right valuation multiple for my industry?

Use the industry dropdown in the tool to auto-populate standard multiples, or research recent sales of similar businesses in your niche. Publicly traded company multiples can serve as a benchmark, but small private business multiples are typically 20–30% lower.

Is this valuation legally binding?

No, this tool provides an estimate for informational purposes only. Formal, legally binding valuations require a certified appraiser who will conduct due diligence, review financial statements, and assess market conditions specific to your business.

Additional Guidance

To get the most accurate results from this calculator:

• Use trailing 12-month (TTM) financial data rather than annual data to account for recent business changes.
• Adjust SDE to remove one-time expenses (e.g., equipment purchases, legal fees) that won’t recur under new ownership.
• For e-commerce businesses, include marketplace fees, shipping costs, and inventory write-downs in your cash flow calculations.
• Compare your results to recent comparable sales (comps) in your industry to validate the estimate.
• Re-run the valuation annually or after major business changes (e.g., new product lines, market expansion) to track value growth.