Free business valuation calculator using 5 proven methods: Revenue multiple (2-5x for SMBs, 5-15x SaaS), EBITDA multiple (3-6x industry standard, 8-12x tech), Seller's Discretionary Earnings (SDE 2-4x for owner-operated), Discounted Cash Flow (DCF), and Asset-based valuation. Calculate fair market value for sale, acquisition, or fundraising. Compare industry multiples, adjust for growth rate (20%+ adds 2-3x premium), and factor in customer concentration risk, recurring revenue (ARR/MRR), and market conditions. Estimate valuation range $100K-$50M+ businesses.
Frequently Asked Questions
What are the most common business valuation methods and when should I use each?
5 primary valuation methods for small-mid sized businesses: (1) REVENUE MULTIPLE: Business value = Annual revenue × Industry multiple (0.5-15x depending on industry).
Best for: Early-stage, pre-profit businesses, SaaS (5-10x ARR).
Examples: $2M revenue SaaS × 6x = $12M, $500K retail × 0.5x = $250K.
Pros: Simple, fast.
Cons: Ignores profitability. (2) EBITDA MULTIPLE: Value = EBITDA × Multiple (3-12x).
Best for: Established profitable businesses, private equity deals.
Example: $800K EBITDA × 5x = $4M.
Higher multiples for: Tech (8-12x), Healthcare (6-9x), Manufacturing (4-6x), Retail (3-5x). (3) SDE MULTIPLE: Value = SDE × 2-4x.
SDE = Net profit + Owner salary + Benefits + Non-recurring expenses.
Best for: Owner-operated businesses <$5M revenue.
Example: $150K profit + $80K owner salary + $20K benefits = $250K SDE × 3x = $750K. (4) DCF: Present value of future cash flows.
Best for: Stable, predictable businesses.
Formula complex but accurate. (5) ASSET-BASED: Sum of assets - liabilities.
Best for: Asset-heavy businesses, liquidation scenarios.
Use multiple methods for range: $3M-$5M valuation = realistic expectation.
What factors increase or decrease my business valuation and how can I maximize value?
VALUE DRIVERS (Increase 20-100%+): (1) Recurring revenue: 30-60% ARR/MRR adds 2-4x multiple premium vs one-time sales.
SaaS $1M ARR at 8x > Services $1M revenue at 3x. (2) Growth rate: 20%+ YoY growth = 50-100% valuation premium. 50% growth = up to 15x revenue. (3) Customer diversification: Top customer <10% revenue = safer (higher multiple). >30% concentration = 20-40% discount. (4) Profit margins: 20%+ EBITDA margin = premium. 40%+ = exceptional (tech multiples). (5) Systems/processes: Business runs without owner = 30-50% premium (owner-independent). (6) Market position: #1-2 in niche = 25-50% premium.
Defensible moat (patents, contracts, brand) adds value.
VALUE DETRACTORS (Decrease 20-50%): (1) Owner dependency: 1-2 key employees = risky (-30%). (2) Revenue decline: -10% YoY = 40-60% valuation drop. (3) Customer churn: >10% annual = concerning for SaaS. (4) One-time contracts vs recurring. (5) Legal issues, disputes, outdated tech.
MAXIMIZE VALUE PREP (12-24 months before sale): (1) Clean financials: 3 years audited statements add 10-15% value. (2) Grow revenue +20%/year. (3) Reduce owner hours to <20/week. (4) Document SOPs. (5) Diversify customers. (6) Switch to recurring model. (7) Increase margins by 5-10%.
Result: $2M business → $3-3.5M with optimization (+50-75%).
About This Page
Editorial & Updates
- Author: SuperCalc Editorial Team
- Reviewed: SuperCalc Editors (clarity & accuracy)
- Last updated: 2026-01-13
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Financial/Tax Disclaimer
This tool does not provide financial, investment, or tax advice. Calculations are estimates and may not reflect your specific situation. Consider consulting a licensed professional before making decisions.