Estimate the market value of your business using the SDE (Seller's Discretionary Earnings) Multiple Method.
Estimated Business Valuation
$0.00
How to Use the Business Valuation Calculator
Determining what a small business is worth is both an art and a science. The most common method for small to mid-sized businesses (SMBs) is the SDE Multiple Method. This calculator helps you determine a baseline asking price based on your financial performance and industry standards.
Understanding the Inputs
Seller's Discretionary Earnings (SDE): This is the total financial benefit a single owner-operator derives from the business. It is calculated as: Net Profit + Owner's Salary + Depreciation + Amortization + Interest + Non-recurring Expenses.
The Multiple: Most small businesses sell for between 1.5x and 4x their SDE. A service business might be at 2x, while a high-growth SaaS company might be 4x or higher.
Inventory and Assets: In many deals, inventory is added to the "multiple" price. For example, if a business is valued at $500k based on earnings, and it has $50k in sellable inventory, the total value is $550k.
Example Calculation
Imagine a local coffee shop with the following financials:
Metric
Value
Annual SDE (Profit + Owner Salary)
$100,000
Industry Multiple
2.5x
Current Inventory
$10,000
Total Valuation
$260,000
Factors That Influence Your Multiple
Why do some businesses get a 2x multiple while others get a 4x? Consider these factors:
Transferability: Can the business run without you? If you are the "face" of the business and customers only deal with you, the multiple drops.
Growth Trends: Is the revenue increasing year-over-year? High growth commands a higher multiple.
Risk Profile: Does the business rely on a single supplier or one large customer (Customer Concentration)? Higher risk equals a lower multiple.
Market Conditions: Interest rates and the overall economy play a massive role in buyer demand.
Disclaimer
This calculator provides a rough estimate for educational purposes. A professional business appraisal or "Quality of Earnings" report from a certified CPA or business broker is recommended before listing a company for sale.
function calculateBusinessValue() {
// Get values from inputs
var sde = document.getElementById("val_sde").value;
var multiple = document.getElementById("val_multiple").value;
var inventory = document.getElementById("val_inventory").value;
var assets = document.getElementById("val_assets").value;
// Convert to numbers or default to 0
var sdeNum = parseFloat(sde) || 0;
var multipleNum = parseFloat(multiple) || 0;
var inventoryNum = parseFloat(inventory) || 0;
var assetsNum = parseFloat(assets) || 0;
// Basic validation
if (sdeNum <= 0 || multipleNum <= 0) {
alert("Please enter a valid Profit and Multiple to calculate value.");
return;
}
// Perform calculation: (SDE * Multiple) + Inventory + Assets
var coreValue = sdeNum * multipleNum;
var totalValue = coreValue + inventoryNum + assetsNum;
// Format currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
// Display results
document.getElementById("val_result_area").style.display = "block";
document.getElementById("val_display_total").innerText = formatter.format(totalValue);
var breakdownText = "Breakdown: " + formatter.format(coreValue) + " (Earnings Value) + " +
formatter.format(inventoryNum) + " (Inventory) + " +
formatter.format(assetsNum) + " (Other Assets)";
document.getElementById("val_breakdown").innerText = breakdownText;
// Smooth scroll to result
document.getElementById("val_result_area").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}