Guide
What Is My Business Worth?
Almost every owner asks this question in terms of revenue, and almost every buyer answers it in terms of earnings. That gap is where most disappointment in a sale comes from. Your business is worth a multiple of what a new owner would actually keep, adjusted for how risky it is to keep it.
Start with earnings, not revenue
The number that matters is Seller's Discretionary Earnings: net profit, plus your own compensation, plus personal expenses run through the business, plus interest, depreciation and any genuinely one-time costs. That is what a buyer is purchasing, because that is the cash available to them before they pay themselves.
Two businesses with identical revenue routinely sell for very different prices. A $2M-revenue business at a 10% margin has $200,000 of SDE. The same revenue at a 20% margin has $400,000. At the same multiple, the second is worth twice the first.
Then apply the multiple
Across roughly 9,500 recorded small business transactions the market average sits near 2.5x SDE. Individual industries vary considerably: ecommerce and technology businesses reach 4x and above, restaurants and retail sit closer to 1.5x to 2.8x, and most service businesses land between.
Above roughly $1M to $2M of EBITDA the arithmetic changes entirely. The buyer pool shifts from individuals using SBA loans to private equity platforms and strategic acquirers, and pricing restates onto an EBITDA multiple of 4.0x to 6.5x. That is not a bigger version of the same multiple: SDE includes your salary and EBITDA does not.
What moves your number inside the band
Owner dependence is the single largest factor. A business that stops when you take a holiday is worth less than one that does not, regardless of profit.
After that: customer concentration (any client above 20% of revenue is a discount), recurring or contracted revenue (a premium), the quality and cleanliness of the financials, the transferability of key relationships and contracts, and whether the trend over the last three years is up or down.
Why you should get a range, not a number
Anyone who gives you a single figure is overstating their precision. Real transaction prices move with deal structure, buyer type, financing terms and how much of the price is contingent. A credible valuation states a range and explains what would move you to the top or bottom of it.
That range is a screening tool. It tells you whether a sale is worth exploring now, or whether two years of preparation would pay for itself several times over.
Find out what your business is worth
Five inputs, a real market range in seconds. Free and confidential.