Business Valuation Multiple Calculator

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) measures operating cash flow for a business with professional management already in place. SDE (Seller's Discretionary Earnings) adds owner compensation, perks, and one-time expenses back to EBITDA, which makes it the right metric for owner-operated Main Street businesses where the buyer is going to replace the owner's labor. SDE multiples are smaller than EBITDA multiples for the same industry because the SDE number itself is larger. Revenue multiples ignore profit entirely and apply a top-line factor, which is usually only useful for high-growth SaaS or for rough triangulation when earnings are volatile.

Recurring subscription revenue is the most predictable, scalable cash flow a small business can produce. A SaaS company with 90% gross margin, low monthly churn, and net revenue retention above 100% compounds value every month with little incremental cost. Buyers pay 5 to 10x EBITDA, or 3 to 10x revenue for the high-growth deals, because they are buying years of predictable future cash flow rather than a single year of profit. Asset-heavy or labor-heavy businesses (restaurants, manufacturing, service) cannot match those margins or that predictability, so their multiples sit much lower.

The ranges in this calculator are aligned with BizBuySell's quarterly Insight Report, which tracks thousands of closed small-business transactions across the United States. Pratt's Stats, DealStats, and IBBA market reports publish similar bands. Multiples shift modestly year to year with interest rates and credit conditions: when SBA financing is cheap and abundant, buyers can pay higher multiples; when rates rise, multiples compress. Use these ranges as a market-tested starting point rather than a guarantee.

No. A multiple-based estimate is the starting point for negotiation, not the final number. Actual sale price depends on the deal structure (all cash, seller note, earn-out), customer concentration (a business where one customer is 40% of revenue trades at a discount), recurring revenue mix, owner dependence, the strength of the management team staying on, lease and supplier transferability, and how many qualified buyers are bidding. Two identical businesses can sell for valuations 50% apart based on those factors alone.

Treat the multiple-based number as one sanity check and a comparable transactions (comps) analysis as the other. Pull three to five recently closed deals in your industry, size range, and geography from BizBuySell, DealStats, or your local M&A broker, and look at the multiples those deals actually settled at, not the original asking multiples. If your calculator number lines up with the comps median, you have a defensible asking price. If the comps are well above or well below this estimate, find out why before going to market: industry consolidation, financing environment, and buyer appetite all move the needle.