Business Valuation Tool
Estimate your company's worth based on cash flow and earnings multiples. Essential tool for business owners, investors, and buyers to determine fair market value.
Valuation Results
| Seller's Discretionary Earnings (SDE) | $280,000 |
|---|---|
| Adjusted Earnings Multiplier | 3.3x |
| Estimated Business Value | $924,000 |
| Value Range (Low) | $840,000 |
| Value Range (High) | $1,008,000 |
About Business Valuation
The Business Valuation Tool helps business owners, investors, and buyers estimate a company's worth based on its cash flow and industry-standard earnings multiples. This tool is essential for those considering selling their business, seeking investment, or evaluating acquisition opportunities.
How to Value a Business
To calculate your business valuation:
- Determine Seller's Discretionary Earnings (SDE): Calculate the true cash flow of the business by adjusting net income for non-cash expenses, owner benefits, and one-time costs.
- Select Industry Multiplier: Choose the appropriate earnings multiple for your industry or enter a custom multiplier.
- Adjust for Growth Potential: Increase or decrease the multiplier based on your business's growth prospects and market conditions.
- Calculate Valuation: Multiply SDE by the adjusted multiplier to estimate your business's fair market value.
Valuation Components
Seller's Discretionary Earnings (SDE): The true cash flow available to a business owner, calculated as:
Net Income + Depreciation + Amortization + Interest Expense + Owner's Salary + Non-Recurring Expenses
Earnings Multiplier: A factor that reflects how much buyers are willing to pay for each dollar of earnings. Multipliers vary by industry, business size, and market conditions.
Growth Potential Adjustment: Businesses with strong growth potential typically command higher multipliers, while those with limited growth prospects may see lower multipliers.
Estimated Business Value: The fair market value of your business, calculated as SDE × Adjusted Multiplier.
Value Range: Most businesses sell within a range of ±10% of the estimated value, depending on market conditions and negotiation.
Why Business Valuation Matters
Accurate business valuation is critical for:
- Selling your business at a fair price
- Seeking investment or financing
- Planning for retirement or succession
- Establishing partner buyout agreements
- Estate planning and tax purposes
This calculator provides a starting point for understanding your business's worth. For a comprehensive valuation, consider consulting with a business appraiser or M&A advisor.