Estimate your business's worth using common valuation methods. Enter your financial data below.
Estimated Business Valuation
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Understanding Business Valuation
Business valuation is the process of determining the economic value of a business or a business unit. It is used for various purposes, including mergers and acquisitions, sales, estate planning, divorce settlements, and strategic decision-making. A precise valuation requires in-depth analysis by a professional, but a free calculator can provide a useful initial estimate based on common financial metrics and valuation methods.
Key Metrics Used in This Calculator:
Annual Revenue: The total income generated by the business over a year from its primary operations.
Net Profit Margin: The percentage of revenue that remains as profit after all expenses, taxes, and interest have been deducted. Calculated as (Net Profit / Revenue) * 100.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance. It's often used as a proxy for cash flow from operations.
Industry Valuation Multiple: A multiplier derived from comparable company transactions or industry benchmarks. This can be a multiple of revenue, EBITDA, or another metric, and it varies significantly by industry and business stage.
Asset Value: The total value of all the assets owned by the business.
Liability Value: The total amount of money the business owes to others.
Valuation Methods Used:
This calculator employs a few common approaches to provide a range of estimates:
Revenue Multiple Method: Valuation = Annual Revenue * Industry Valuation Multiple (when multiple is revenue-based).
EBITDA Multiple Method: Valuation = EBITDA * Industry Valuation Multiple (when multiple is EBITDA-based).
Earnings Multiple Method: First, we calculate Net Profit = Annual Revenue * (Net Profit Margin / 100). Then, Valuation = Net Profit * Industry Valuation Multiple (when multiple is earnings-based). We use a common multiplier range for net profit, typically 3x to 7x, if a specific earnings multiple isn't provided or applicable. For simplicity in this calculator, if the provided multiple is generic, we'll apply it to EBITDA and Net Profit, giving a blended idea.
Asset-Based Valuation (Net Asset Value): Valuation = Total Asset Value – Total Liability Value. This method is often more relevant for asset-heavy businesses or those facing liquidation.
The final estimated valuation is presented as an average of the results from the revenue, EBITDA, and net profit multiple methods (assuming a reasonable multiple is applied to these metrics) and considers the net asset value. A specific multiple provided by the user will be prioritized.
How to Use This Calculator:
Gather your business's latest financial statements.
Input your Annual Revenue, Net Profit Margin, and EBITDA accurately.
Research typical valuation multiples for businesses in your industry. Enter this or a general multiple if you're unsure.
Input your total asset and liability values.
Click "Calculate Valuation".
Disclaimer: This calculator provides a simplified, estimated business valuation for informational purposes only. It does not constitute professional financial advice. Actual business valuations are complex and should be performed by qualified professionals who can consider a wider range of factors, including market conditions, growth potential, management team, intellectual property, and specific industry nuances.
function calculateBusinessValuation() {
var annualRevenue = parseFloat(document.getElementById("annualRevenue").value);
var netProfitMargin = parseFloat(document.getElementById("netProfitMargin").value);
var ebitda = parseFloat(document.getElementById("ebitda").value);
var valuationMultiple = parseFloat(document.getElementById("valuationMultiple").value);
var assetValue = parseFloat(document.getElementById("assetValue").value);
var liabilityValue = parseFloat(document.getElementById("liabilityValue").value);
var valuationResults = [];
var validInputs = true;
// Validate inputs
if (isNaN(annualRevenue) || annualRevenue < 0) { validInputs = false; alert("Please enter a valid positive number for Annual Revenue."); }
if (isNaN(netProfitMargin) || netProfitMargin 100) { validInputs = false; alert("Please enter a valid Net Profit Margin between 0 and 100."); }
if (isNaN(ebitda) || ebitda < 0) { validInputs = false; alert("Please enter a valid positive number for EBITDA."); }
if (isNaN(valuationMultiple) || valuationMultiple <= 0) { validInputs = false; alert("Please enter a valid positive number for the Valuation Multiple."); }
if (isNaN(assetValue) || assetValue < 0) { validInputs = false; alert("Please enter a valid positive number for Total Asset Value."); }
if (isNaN(liabilityValue) || liabilityValue 0) {
valuationResults.push(netAssetValue);
}
// Calculate the average of the results, excluding potentially outliers if necessary, but simple average for now.
var totalValuation = 0;
for (var i = 0; i 0 ? totalValuation / valuationResults.length : 0;
// Display the result
document.getElementById("valuationResult").innerText = "$" + averageValuation.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}