Simple Business Valuation Calculator
Estimate your business enterprise value and equity value using an earnings multiple approach.
Understanding Business Valuation
Valuing a small or medium-sized private business is often done using an earnings multiple approach. Buyers look at the company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or SDE (Seller's Discretionary Earnings) and apply a multiple based on the industry, growth, and risk.
Enterprise Value vs. Equity Value
Enterprise Value represents the total value of the firm's operations. Equity Value is the value to the owners, calculated as Enterprise Value plus cash, minus total debt/liabilities.
Worked Example
- Annual Earnings: $250,000
- Multiple: 3x (Enterprise Value = $750,000)
- Cash on hand: $50,000
- Liabilities: $25,000
- Equity Value = $750,000 + $50,000 - $25,000 = $775,000.
Frequently Asked Questions
What is a normal earnings multiple?
For most main street small businesses, multiples typically range from 2x to 4x SDE. Larger middle-market companies might command 4x to 8x EBITDA or higher.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.