6
x
0.8
x
1.025
x
$1,230,000
$820,000
$506,250
$962,250
6
x
0.8
x
1.025
x
$1,230,000
$820,000
$506,250
$962,250
The Business Valuation Calculator estimates the total value of a business using three widely accepted approaches: EBITDA multiple, revenue multiple, and asset-based valuation. Whether you are buying, selling, raising capital, or planning succession, understanding your company's worth is the starting point for every critical business decision.
Business valuation is both an art and a science. The EBITDA multiple method is the most common approach used by private equity firms, investment bankers, and M&A professionals. It works by multiplying a company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) by an industry-specific multiple that reflects market conditions, growth prospects, and risk factors. Typical multiples range from 3x to 8x for small to mid-sized businesses, while high-growth technology companies can command multiples of 10x to 30x or higher.
The revenue multiple approach is particularly useful for early-stage companies or businesses with irregular earnings. SaaS companies, for instance, are frequently valued at 5x to 15x annual recurring revenue. Service businesses typically trade at 0.5x to 2x revenue, while manufacturing firms fall in between at 1x to 3x.
The asset-based approach calculates value by summing up all tangible and intangible assets minus liabilities. This method is most appropriate for holding companies, real estate firms, and businesses being liquidated. It represents the minimum value a buyer should expect, as it does not account for future earning potential.
Our calculator provides all three valuations simultaneously and averages them to give a balanced estimate. Keep in mind that actual transaction values depend on negotiation, market conditions, buyer synergies, and dozens of qualitative factors including management quality, customer concentration, intellectual property, and competitive moats. For transactions above $1 million, professional valuation advisors are strongly recommended.
Industry multiples vary significantly across sectors. Healthcare and technology companies typically command premium multiples due to recurring revenue models and high growth potential. Retail and hospitality businesses may see lower multiples reflecting thinner margins and higher competition. The chosen multiple should reflect your specific industry, company size, growth trajectory, and risk profile.
This calculator uses three valuation methods:
The average of all three methods provides a balanced valuation range.
If the EBITDA multiple valuation significantly exceeds the asset-based valuation, the business has strong goodwill and intangible value (brand, customer relationships, intellectual property). If the asset-based valuation is higher, the company may be underperforming relative to its asset base. A wide gap between methods suggests additional analysis is needed.
Inputs
Results
Small business with $100K EBITDA at 4x multiple = $400K EBITDA valuation
Inputs
Results
High-growth tech company with 12x multiple
The EBITDA multiple method is the most widely used for private companies. It multiplies annual EBITDA by an industry-specific multiple, typically ranging from 3x to 15x depending on the sector, size, and growth prospects.
Industry multiples are derived from comparable transactions (comps) in your sector. Resources like BizBuySell, PitchBook, and DealStats provide transaction data. Multiples vary by industry: SaaS (8-15x), healthcare (7-12x), manufacturing (4-7x), retail (3-5x), restaurants (2-4x).
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures core operating profitability by removing the effects of financing decisions, tax jurisdictions, and non-cash accounting charges, making it ideal for comparing businesses.
Yes, high-margin and high-growth businesses routinely sell for multiples of their revenue. A SaaS company with 80% gross margins and 50% annual growth might be worth 10-20x revenue, while a low-margin distributor might be worth only 0.3-0.5x revenue.
Key value drivers include recurring revenue, high profit margins, strong growth trajectory, diversified customer base, proprietary technology or IP, experienced management team, scalable operations, and dominant market position.
Higher growth rates justify higher multiples. A company growing at 30% annually will typically command 2-3x the multiple of one growing at 5%. The market prices future earnings potential into the current valuation.
Enterprise value (EV) is the total value of a business including debt. Equity value is what owners actually receive: EV minus debt plus cash. When valuing a business using EBITDA multiples, the result is enterprise value.
Seller's Discretionary Earnings (SDE) is preferred for owner-operated businesses with less than $1M in earnings. SDE adds back owner compensation and perks to EBITDA. For larger businesses with professional management, EBITDA is the standard metric.
Online calculators provide rough estimates useful for initial planning. Actual valuations require detailed financial analysis, comparable transaction data, and professional judgment. For transactions, always engage a certified business appraiser (ABV, ASA, or CVA designation).
DLOM reflects the reduced value of private company shares compared to publicly traded equivalents. Private companies typically receive a 15-35% discount because their shares cannot be easily sold on a public exchange.
Roboculator Team
The Roboculator Team explains calculations, planning tools, and practical formulas in clear language for real-life situations.
How helpful was this calculator?
Be the first to rate!
Startup Valuation Calculator
Business & Corporate Finance Calculators
DCF Calculator (Discounted Cash Flow)
Business & Corporate Finance Calculators
NPV Calculator (Net Present Value)
Business & Corporate Finance Calculators
IRR Calculator (Internal Rate of Return)
Business & Corporate Finance Calculators
MIRR Calculator
Business & Corporate Finance Calculators
Payback Period Calculator
Business & Corporate Finance Calculators
