Business Valuation Calculator
Discover your company's true market value with professional-grade accuracy
Method
Data
Results
Choose Valuation Method
Select the most appropriate method for your business type. You can run multiple methods for comparison.
Revenue Multiple
Best for SaaS, e-commerce, and high-growth companies with stable revenue
Profit Multiple
Ideal for established businesses with consistent EBITDA/SDE
Asset-Based
Perfect for manufacturing, real estate, and asset-heavy businesses
Discounted Cash Flow
For mature businesses with predictable future cash flows
Enter Business Data
$
$
$
$
$
Your Business Valuation
$0
Estimated Range: $0 - $0
Based on method
Base Value
$0
Industry Adj.
$0
Final Valuation
$0
Frequently Asked Questions
What is the most accurate valuation method?
The Discounted Cash Flow (DCF) method is theoretically most accurate as it values future cash flows, but it requires reliable projections. For small businesses, the Profit Multiple or SDE method is often most practical. Using multiple methods and comparing results gives the best estimate.
How do I determine the right multiple?
Multiples vary by industry, growth rate, and risk. SaaS companies: 4-8x revenue. Professional services: 1-3x revenue. Main street businesses: 2-4x SDE. High-growth companies command higher multiples. Research recent comparable sales in your industry.
Should I include inventory in valuation?
Yes, for asset-based valuations and many small business sales, inventory is added to the final price. For income-based methods, it's often included in the multiple. Specify whether your valuation includes inventory when presenting to buyers.
How long does a valuation typically take?
A professional valuation takes 1-4 weeks. This calculator gives you an instant estimate. For official purposes (sale, legal, financing), hire a certified business appraiser who will provide a detailed 30-50 page report.
Can I increase my business value before selling?
Absolutely. Focus on: 1) Increasing recurring revenue, 2) Documenting systems, 3) Reducing owner dependence, 4) Diversifying customers, 5) Improving profit margins, 6) Cleaning up financials. These can increase value by 20-50%.
Understanding Business Valuation: A Complete Guide to Using Our Calculator
Whether you’re preparing to sell your company, seeking investment, or simply planning for the future, knowing the true market value of your business is essential. Our Business Valuation Calculator provides professional-grade estimates using the same methodologies employed by top financial analysts and M&A advisors.
What Is Business Valuation?
Business valuation is the process of determining the economic value of a business or company unit. Think of it as an appraisal for your business—similar to how a home is appraised before sale, but significantly more complex. The valuation considers your financial performance, assets, market position, growth potential, and industry conditions.
Business owners typically seek valuations for several key reasons:
- Selling the business: To set a fair asking price
- Seeking investors: To determine how much equity to offer for capital
- Buy-sell agreements: For partnership transitions
- Estate planning: For tax and inheritance purposes
- Divorce proceedings: As part of asset division
- Strategic planning: To track growth and make informed decisions
A proper business valuation removes guesswork and emotion from one of the most important financial decisions you’ll make.
How to Use the Business Valuation Calculator
Our calculator guides you through a simple three-step process designed to be intuitive yet comprehensive. Here’s exactly how to get the most accurate results:
Step 1: Select Your Valuation Method
The calculator offers four professional methodologies. Choose based on your business type and available data:
Revenue Multiple Method – Best for:
- SaaS and subscription-based businesses
- E-commerce companies with stable revenue
- High-growth startups not yet profitable
- Any business where revenue is the primary value driver
Typical multiples: SaaS (4-8x), E-commerce (1-3x), Agencies (0.5-1.5x)
Profit Multiple Method – Best for:
- Established businesses with consistent profits
- Companies with strong EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization)
- Main street businesses valued on Seller’s Discretionary Earnings (SDE)
- Businesses with 3+ years of profitable operations
Typical multiples: Most industries fall between 2-6x profit
Asset-Based Method – Best for:
- Manufacturing companies with heavy equipment
- Real estate holding companies
- Businesses with significant tangible assets
- Companies being liquidated
Values assets minus liabilities, ideal for asset-heavy businesses
Discounted Cash Flow (DCF) – Best for:
- Mature businesses with predictable cash flows
- Companies with long-term contracts
- Businesses in stable industries
- Professional investors evaluating acquisitions
Most theoretically accurate but requires reliable future projections
Pro Tip: Run multiple methods and compare results. If valuations differ significantly, investigate why. This often reveals insights about your business strengths and weaknesses.
Step 2: Enter Your Business Data
Once you select a method, the calculator asks for specific financial inputs. Here’s how to gather each:
For Revenue Multiple:
- Annual Revenue: Use your trailing twelve months (TTM) revenue. If seasonal, average the last 3 years.
- Revenue Multiple: Research comparable sales in your industry. When in doubt, start with 3x.
For Profit Multiple:
- Annual EBITDA/SDE: Use profit after adding back owner salary, interest, taxes, depreciation, and amortization. SDE includes owner compensation.
- Multiple: 2-4x for small businesses, 4-6x for mid-market, higher for high-growth companies.
For Asset-Based:
- Total Assets: Include equipment, inventory, receivables, real estate at fair market value.
- Total Liabilities: All debts, loans, accounts payable, and obligations.
For DCF:
- Projected Cash Flow: Next year’s expected free cash flow (profit + depreciation – capital expenditures).
- Discount Rate: Your required return rate (10-15% for stable businesses, 20-30% for risky ventures).
- Growth Rate: Sustainable long-term growth (2-5% for mature businesses, 5-10% for growth companies).
Industry Selection: Always select your industry. This applies an industry-specific risk adjustment multiplier. Technology companies receive premium valuations; restaurants receive discounts due to high failure rates.
Step 3: Review Your Results
The calculator provides:
Final Valuation: The single best estimate based on your inputs and method selected.
Valuation Range: A realistic 20% range (80%-120% of calculated value) accounting for negotiation and market factors.
Component Breakdown:
- Base Value: The raw calculation before adjustments
- Industry Adjustment: The premium or discount applied based on your sector
- Final Valuation: The adjusted, final estimated value
Visual Chart: A bar chart showing how your valuation was built, helping you understand which factors matter most.
Understanding Your Results
What the Numbers Mean
Base Value: This is the pure mathematical result of your valuation formula. For revenue multiple, it’s revenue × multiple. For asset-based, it’s assets minus liabilities.
Industry Adjustment: Different industries command different valuations for the same financial metrics. A software company with $1M profit might be worth $6M (6x multiple), while a restaurant with the same profit might be worth $3M (3x multiple) due to higher risk and lower growth potential.
Final Valuation: This industry-adjusted figure represents your most probable market value. Buyers will negotiate within the provided range.
Valuation Range Explained
The calculator provides an 80%-120% range because:
- Market conditions: Economic cycles affect buyer willingness to pay
- Buyer type: Strategic buyers pay premiums; individual buyers seek discounts
- Urgency: Quick sales often mean lower prices
- Asset vs. stock sale: Structure affects final price
- Terms: Cash deals vs. seller financing impact valuation
Maximizing Your Business Value
Use these strategies to increase valuation before a sale or investment round:
1. Clean Financial Records
- Separate personal and business expenses
- Use accrual accounting
- Have 3+ years of audited financials
- Document all revenue streams
2. Reduce Owner Dependence
- Train management team
- Document processes (SOPs)
- Delegate key customer relationships
- Automate where possible
3. Diversify Revenue
- No single customer over 15% of revenue
- Multiple revenue streams
- Recurring revenue is gold (SaaS, subscriptions, contracts)
- Reduce customer concentration risk
4. Boost Profitability
- Cut unnecessary expenses
- Improve gross margins
- Negotiate better supplier terms
- Eliminate non-core activities
5. Strengthen Intangible Assets
- Protect intellectual property
- Build brand recognition
- Secure trademarks and patents
- Develop proprietary systems
6. Prepare Documentation
- Organize legal documents
- Clean up contracts
- Resolve outstanding issues
- Prepare data room
Common Mistakes to Avoid
Overvaluing Based on Emotion: Your years of hard work don’t directly translate to financial value. Buyers pay for future returns, not past effort.
Ignoring Market Conditions: A great business sells for less in a recession. Timing matters.
Mixing Methods: Don’t cherry-pick the highest valuation. Use multiple methods to triangulate true value.
Forgetting Working Capital: Buyers often require a minimum amount of cash or working capital to remain in the business.
Neglecting Customer Concentration: Having 50% of revenue from one client dramatically reduces value.
Poor Record Keeping: Incomplete financials can reduce valuation by 20-30% due to perceived risk.
When to Hire a Professional Appraiser
This calculator provides excellent estimates, but hire a certified appraiser when:
- The valuation is for legal purposes (divorce, estate, dispute)
- You’re selling a business worth over $1M
- You need a formal 30-50 page valuation report
- Bank financing requires an independent appraisal
- Partners are buying each other out
Professional appraisers use the same methods but add:
- Detailed financial analysis
- Market comparable transactions
- Discount rate calculations using CAPM
- Premium/control discounts
- Formal report suitable for courts and banks
Cost: $3,000-$15,000 for most small to mid-sized businesses.
Frequently Asked Questions
How accurate is this calculator? The calculator uses industry-standard formulas identical to professional appraisers. Accuracy depends entirely on your input quality. Garbage in, garbage out. With accurate financials and appropriate multiples, results are typically within 10-15% of professional valuations.
Can I use this for a bank loan? Banks usually require an independent third-party appraisal. However, this calculator helps you understand what to expect and prepares you for lender discussions.
What if my business is losing money? If unprofitable, use asset-based valuation or revenue multiple if growing rapidly. Negative profits make valuation difficult; focus on demonstrating path to profitability.
Should I include real estate in valuation? Typically, value business operations separately from real estate, then add them together. Real estate usually gets its own appraisal.
How often should I recalculate?
- Quarterly for fast-growing companies
- Annually for stable businesses
- Anytime major events occur (new product, lost customer, market shift)
- 6 months before planned sale
What’s the difference between Enterprise Value and Equity Value? Enterprise Value = Value of the entire business (what our calculator provides) Equity Value = Enterprise Value – Debt + Cash (what you actually receive)
Do I use pre-tax or post-tax numbers? Most methods use pre-tax figures (EBITDA, revenue). The specific method determines what’s appropriate.
What are ‘add-backs’ and why do they matter? Add-backs are expenses that benefit the current owner but won’t exist for the buyer (owner salary, personal car, one-time expenses). They increase your profit and thus valuation.
How do I find comparable multiples for my industry?
- BizBuySell sold listings
- Business broker websites
- IBBA (International Business Brokers Association) reports
- DealStats database
- Industry associations
Can I value a startup with no revenue? Pre-revenue startups require different methods (scorecard, Berkus, venture capital). This calculator is designed for businesses with financial history.
Conclusion
Knowing your business value isn’t just for selling—it’s a critical management tool. Regular valuations help you:
- Track growth and performance
- Identify value drivers and destroyers
- Make informed strategic decisions
- Prepare for unexpected opportunities
- Plan your eventual exit
Our calculator democratizes professional-grade valuation, giving you insights that previously required expensive advisors. Use it regularly to build a more valuable, sustainable business.
Remember: The best time to know your business value is before you need to. Start calculating today and take control of your financial future.