Business Valuation Calculator
Estimate the market value of your company using the EBITDA Multiplier Method.
*This is an estimate based on the EBITDA Multiplier method. Actual market value may vary based on market conditions, assets, and intangible factors.
How to Calculate Your Business Value
Valuing a business is both an art and a science. The most common method for small to mid-sized businesses is the EBITDA Multiplier Method. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It serves as a proxy for the free cash flow of the business.
Step 1: Determine EBITDA
Start by taking your annual revenue and subtracting all operating expenses. This includes rent, payroll, marketing, and utilities, but excludes taxes and interest payments on debt.
Step 2: Choose Your Multiplier
The multiplier is determined by your industry, growth potential, and risk profile. For example:
- Service Businesses: Usually trade between 2x and 3x EBITDA.
- Manufacturing: Often ranges between 3.5x and 5x due to physical assets.
- Tech & SaaS: Can reach 8x to 15x depending on churn rates and recurring revenue.
Step 3: Enterprise vs. Equity Value
The Enterprise Value represents the total value of the business operations. To find the Equity Value (what you actually take home), you must add back any cash currently in the business bank accounts and subtract any outstanding loans or debts.
Example Calculation
If your business generates $1,000,000 in revenue with $700,000 in expenses, your EBITDA is $300,000. If the industry standard multiplier is 4x, your Enterprise Value is $1,200,000. If you have $50,000 in cash and $200,000 in debt, your final Equity Value is $1,050,000.