Free educational planning tool

Business Valuation Calculator

Enter normalized annual owner earnings and a reasonable range of earnings multiples to explore a starting estimate of business value.

Estimate a Starting Range Learn What Affects Value

Starting estimate

Calculate an educational value range

This calculator uses Seller's Discretionary Earnings, commonly called SDE. Use normalized annual earnings after reviewing owner compensation, personal expenses, and reasonable adjustments.

Understanding the numbers

What is Seller's Discretionary Earnings?

SDE is a common starting measure for many owner operated businesses. It generally begins with business profit and may include one owner's compensation, interest, taxes, depreciation, amortization, and supportable personal or one time expenses. Every adjustment should be documented and defensible.

Factors that can support a stronger multiple

Consistent growth, clean financial records, stable employees, limited owner dependence, transferable contracts, a secure lease, diverse customers, and documented systems may help reduce buyer risk.

Factors that can reduce a multiple

Unverified earnings, declining sales, customer concentration, short lease terms, deferred maintenance, heavy owner involvement, staffing problems, legal concerns, and financing limitations may increase buyer risk.

Important: Asking price and supportable value are not always the same. A buyer and lender will usually examine verified cash flow, required debt payments, working capital, future investment, and the buyer's expected return.

Common questions

Business valuation calculator questions

Is this a formal business valuation?

No. It is a free educational tool that shows how earnings and a selected multiple can create a starting range. A formal valuation requires deeper financial, operational, market, and risk analysis.

How do I choose an earnings multiple?

The appropriate multiple depends on the industry, size, earnings quality, growth, owner involvement, customer concentration, lease, assets, competition, financing, and other risks. The default range is only an example and should be adjusted with reliable market support.

Does asking price equal business value?

Not necessarily. An asking price can reflect the owner's goals, while a supportable value considers verified performance, risk, assets, financing, and market evidence.

Is commercial real estate included?

No. Commercial real estate should be reviewed separately. Market rent, property income, condition, location, comparable sales, and capitalization rates can affect real estate value and the business's sustainable earnings.

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