Business Valuation Calculator - EBITDA & SDE Multiple
Calculate your business value using EBITDA multiples, SDE multiples, revenue multiples, or DCF analysis. Get industry-specific valuation ranges for M&A planning.
Financial Data
Earnings Before Interest, Taxes, Depreciation, Amortization
Seller's Discretionary Earnings (for small businesses)
Valuation Multiples
Industry range: 3x - 5x
Industry range: 0.5x - 1.5x
Estimated Value
Business Value
$2.00M
EBITDA Multiple Method
Industry Range
Based on 3x - 5x EBITDA
All Methods
Business Valuation Multiples by Industry (2025)
| Industry | EBITDA Multiple | SDE Multiple | Revenue Multiple |
|---|---|---|---|
| SaaS / Software | 8x - 15x | 5x - 10x | 3x - 10x |
| Healthcare | 6x - 10x | 4x - 7x | 1x - 3x |
| Professional Services | 4x - 8x | 3x - 5x | 0.8x - 2x |
| Manufacturing | 4x - 7x | 3x - 5x | 0.5x - 1.5x |
| E-commerce | 3x - 6x | 2.5x - 4x | 0.5x - 2x |
| Retail | 3x - 5x | 2x - 3.5x | 0.3x - 1x |
| Restaurant | 2x - 4x | 1.5x - 3x | 0.3x - 0.8x |
*Multiples vary based on size, growth rate, profitability, and market conditions. Larger businesses typically command higher multiples.
Business Valuation Methods Explained
EBITDA Multiple Method
Most common for businesses with $1M+ revenue. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) represents operating cash flow.
Best for: Mid-market businesses, PE acquisitions
SDE Multiple Method
Preferred for owner-operated small businesses. SDE (Seller's Discretionary Earnings) adds back owner salary and perks to show true earning potential.
Best for: Small businesses under $5M revenue
Revenue Multiple Method
Used for high-growth companies or those with negative earnings. Common in tech and SaaS where growth matters more than current profitability.
Best for: SaaS, high-growth startups
DCF Analysis
Projects future cash flows and discounts them to present value. Most theoretically sound but requires accurate growth and discount rate assumptions.
Best for: Stable businesses with predictable cash flows
Factors That Increase Business Value
Value Drivers (+)
- ✓Recurring Revenue: Subscriptions, contracts, repeat customers
- ✓Strong Growth: 20%+ annual revenue growth
- ✓Diversified Customers: No customer over 10% of revenue
- ✓Strong Management: Business runs without owner
- ✓Clean Financials: Audited or reviewed statements
- ✓Proprietary Assets: Patents, technology, brand
Value Detractors (-)
- ✗Owner Dependency: Business relies on owner relationships
- ✗Customer Concentration: Top customer over 25% of revenue
- ✗Declining Revenue: Negative growth trend
- ✗Industry Risk: Disruption, regulation, competition
- ✗Messy Books: Commingled finances, cash transactions
- ✗Lease Issues: Short-term or unfavorable lease
Frequently Asked Questions
What's the difference between EBITDA and SDE?
EBITDA is used for larger businesses and represents operating earnings. SDE (Seller's Discretionary Earnings) is used for small businesses and adds back the owner's salary, benefits, and personal expenses to show what a new owner could earn. SDE = Net Income + Owner Salary + Owner Benefits + Interest + Depreciation + Amortization + One-time expenses.
Why do SaaS companies have higher multiples?
SaaS businesses command premium valuations (8-15x EBITDA) because of recurring revenue, high gross margins (70-90%), scalability, and predictable cash flows. Monthly recurring revenue (MRR) provides visibility into future earnings, reducing buyer risk.
How do I increase my business valuation?
Focus on: (1) Building recurring revenue streams, (2) Diversifying your customer base, (3) Creating systems so the business runs without you, (4) Cleaning up financials with proper accounting, (5) Documenting processes and training employees, (6) Securing long-term contracts and leases.
When should I get a professional valuation?
Get a professional valuation when: selling your business, bringing in investors, estate planning, divorce proceedings, partner buyouts, or obtaining SBA loans. Professional valuations cost $5,000-$50,000+ depending on business complexity.