Estimate your business's worth using common valuation multiples.
Your estimated business valuation will appear here.
Understanding Business Valuation
Determining the value of a business is a crucial step for various reasons, including selling the business, seeking investment, planning for succession, or simply understanding its financial health. A business valuation provides a professional estimate of a company's worth. While complex valuations often involve professional appraisers, a "free business valuation calculator" can offer a useful preliminary estimate based on common financial metrics and industry standards.
How This Calculator Works
This calculator uses a simplified approach to business valuation, primarily focusing on two common methods:
Earnings Multiples Method: This is one of the most widely used methods for valuing small to medium-sized businesses. It involves taking a company's earnings (typically net profit or EBITDA) and multiplying it by an industry-specific multiple. The multiple reflects factors like growth potential, industry stability, market demand, and risk. A higher multiple generally indicates a business with stronger growth prospects or a more desirable industry.
Asset-Based Valuation: This method values a business based on the net worth of its tangible assets (assets minus liabilities). It's often used for businesses where assets are the primary drivers of value, such as manufacturing or real estate companies, or for businesses that are not profitable but still hold significant tangible assets.
This calculator combines these approaches to provide a more comprehensive estimate. The final valuation is presented as a range, showcasing the potential worth based on different metrics.
Formulae Used:
Valuation based on Net Profit:
Valuation = Annual Net Profit × Valuation Multiple
Valuation based on Assets:
Valuation = Total Tangible Asset Value
The calculator aims to present a broad estimate by considering both the earning potential and the asset base of the business. For a more precise valuation, consider the specific nuances of your industry, economic conditions, and any unique intellectual property or goodwill your business possesses.
When to Use a Business Valuation Calculator:
Planning to Sell: Get a ballpark figure to start negotiations.
Seeking Investment: Understand your company's worth to potential investors.
Mergers & Acquisitions: Assess potential targets or your own business's attractiveness.
Succession Planning: Determine value for family or employee buyouts.
Financial Planning: Gain insights into your company's equity and growth.
Disclaimer: This calculator provides an estimated valuation for informational purposes only. It is a simplified model and does not constitute professional financial advice. Actual business valuations can be significantly more complex and should be performed by qualified professionals.
function calculateValuation() {
var annualRevenue = parseFloat(document.getElementById("annualRevenue").value);
var annualNetProfit = parseFloat(document.getElementById("annualNetProfit").value);
var valuationMultiple = parseFloat(document.getElementById("valuationMultiple").value);
var assetValue = parseFloat(document.getElementById("assetValue").value);
var resultDiv = document.getElementById("result");
resultDiv.classList.remove("calculating"); // Remove any previous 'calculating' class
// Input validation
if (isNaN(annualRevenue) || annualRevenue <= 0) {
resultDiv.innerHTML = "Please enter a valid Annual Revenue.";
return;
}
if (isNaN(annualNetProfit) || annualNetProfit <= 0) {
resultDiv.innerHTML = "Please enter a valid Annual Net Profit.";
return;
}
if (isNaN(valuationMultiple) || valuationMultiple <= 0) {
resultDiv.innerHTML = "Please enter a valid Industry Valuation Multiple.";
return;
}
if (isNaN(assetValue) || assetValue < 0) { // Asset value can be 0
resultDiv.innerHTML = "Please enter a valid Total Tangible Asset Value.";
return;
}
// Calculations
var valuationFromProfit = annualNetProfit * valuationMultiple;
var valuationFromAssets = assetValue;
// Presenting a range or combined value – for simplicity, let's show both clearly
// A common approach might be to take an average or present a range.
// For this example, let's show both as they represent different valuation perspectives.
// We can also consider a weighted average or a scenario where one is dominant.
// For a "free" calculator, presenting the components is informative.
// Let's calculate a blended value, or at least show both distinct values.
// A simple approach is to show the profit-based and asset-based values.
// For a single "estimated" value, one might take an average, or a more complex blend.
// Let's provide the profit-based valuation as the primary output, and mention asset value.
var estimatedValuation = valuationFromProfit; // Primary estimate from earnings
// Displaying the result
// Using currency formatting for better readability of large numbers
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
resultDiv.innerHTML = "Estimated Valuation (based on profit): " + formatter.format(estimatedValuation) +
"(Based on asset value: " + formatter.format(valuationFromAssets) + ")";
// Add class for styling if needed (e.g., to indicate a result is displayed)
resultDiv.classList.add("calculated");
}