Small Business Valuation Calculator
How much does the business earn in a normal year?
How many years has your business been active?
How stable is your industry and business model?
What is the trend of your annual profits?
How easy would it be for a new owner to take over? Is the current owner replaceable, or are they a key part of the business?
Does your business have any surplus cash or investments? If so, how much are they worth?
Does your business have any debts? If so, how much for?
The multiple of annual earnings used to estimate the value of your business.
If you’re a business owner looking to sell your small business or startup, our business valuation calculator will help you quickly estimate its value.
If you’re a buyer looking to buy a small business, enter the business’s data into the valuation calculator get a quick rough price.
Please bear in mind that this calculator is unlikely to give a completely accurate valuation as there are many more factors that should be considered. Consult with a business broker and do your own sums to arrive at your own valuation before investing in a business.
This calculator uses an earnings multiple method to estimate the value of a company.
First of all, you should enter the amount the business earns in a normal year. This figure should be entered as the EBITDA (earnings before interest, tax, depreciation and amortisation).
This figure is then multiple by a number (the ‘multiple’), to estimate the value of the business. A business that is considered risky, more difficult to transfer to a buyer, or in decline will have a lower multiple. A business that is considered low-risk, easy to transfer to a buyer, and growing, will have a higher multiple.
The maximum multiple used in this calculator is 8 times yearly earnings. The median EBITDA multiple for US companies earning less than $1 million a year is 3.9 according to the 2020 Private Capital Markets Report produced by Pepperdine University. Out of the industries the report looked at, healthcare & biotech had the lowest median multiple at 2.5, and media & entertainment had the highest at 5.
The calculator tool on this page considers the following factors to determine the multiple:
- How many years has your business been active? – A business that has been established for longer will be considered lower risk, and therefore have a higher multiple.
- How stable is the industry and business model? – More reliable industries and business models will have higher multiples.
- What is the trend of annual profits? – Businesses that are growing year-on-year will command higher multiples.
- How easy would it be for a new owner to take over? – Some businesses are strongly tied to the specific skills or public persona of the owner. The easier it is for a new owner to take over the business without risking its profitability, the higher the multiple.
The small business valuation calculator also factors in surplus cash or investments as well as debts before calculating the final earnings multiple and valuation estimate.