Interest Rate Swap Valuation Calculator

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Business Valuation Calculator

Estimate the market value of your business using the SDE Multiplier method.

1.5x (Service, High Risk)
2.0x (Retail, Small Brick & Mortar)
2.5x (Healthy Small Biz Average)
3.0x (Manufacturing, Established)
3.5x (SaaS, High Growth)
4.0x (Strategic Value)

Estimated Valuation Summary

Net Operating Income:
$0
Total Add-backs:
$0
Seller’s Discretionary Earnings (SDE):
$0
Estimated Business Value:
$0

How This Business Valuation Calculator Works

This calculator utilizes the Seller’s Discretionary Earnings (SDE) method, which is the standard valuation approach for small to medium-sized businesses (SMBs). Unlike larger corporations valued on EBITDA, SMBs are often valued based on the total financial benefit available to a single owner-operator.

What is Seller’s Discretionary Earnings (SDE)?

SDE is a calculation that represents the true earning power of a business. It starts with your net profit and “adds back” expenses that are specific to the current owner or are non-cash items. This allows a potential buyer to see how much money they would actually have at their disposal if they took over the operation.

  • Revenue: All money coming into the business before expenses.
  • Expenses: All standard operating costs (COGS, rent, utilities, staff).
  • Add-backs: Owner’s salary, health insurance, personal travel, depreciation, and one-time non-recurring expenses.

Understanding Industry Multipliers

The “Multiplier” is a figure used to quantify the risk and growth potential of your business. A higher multiplier suggests the business is more stable, has high growth potential, or possesses unique intellectual property. Typical small businesses sell for between 1.5x and 4.0x their annual SDE.

Example Calculation

Imagine a local coffee shop with the following annual figures:

  • Revenue: $400,000
  • Operating Expenses: $320,000
  • Owner’s Salary: $60,000 (Add-back)
  • Depreciation: $5,000 (Add-back)

First, we find the Net Income: $400,000 – $320,000 = $80,000.
Next, we calculate SDE: $80,000 + $60,000 + $5,000 = $145,000.
If the industry multiplier is 2.5x, the valuation is: $145,000 * 2.5 = $362,500.

Frequently Asked Questions

Is this the same as an appraisal? No. This is an estimate based on financial inputs. A formal appraisal involves a deep dive into assets, market trends, and legal audits.

Should I include inventory in the price? Usually, the inventory is sold “plus inventory” (SAV – Stock At Value) on top of the calculated SDE multiplier price, though this varies by industry.

function calculateValuation() {
var rev = parseFloat(document.getElementById(“annualRevenue”).value) || 0;
var exp = parseFloat(document.getElementById(“annualExpenses”).value) || 0;
var sal = parseFloat(document.getElementById(“ownerSalary”).value) || 0;
var dep = parseFloat(document.getElementById(“depreciation”).value) || 0;
var int = parseFloat(document.getElementById(“interestExp”).value) || 0;
var mult = parseFloat(document.getElementById(“multiplier”).value) || 0;
var noi = rev – exp;
var addBacks = sal + dep + int;
var sde = noi + addBacks;
var totalValuation = sde * mult;
// Formatting as Currency
var formatter = new Intl.NumberFormat(‘en-US’, {
style: ‘currency’,
currency: ‘USD’,
maximumFractionDigits: 0
});
document.getElementById(“resNOI”).innerHTML = formatter.format(noi);
document.getElementById(“resAddBacks”).innerHTML = formatter.format(addBacks);
document.getElementById(“resSDE”).innerHTML = formatter.format(sde);
document.getElementById(“resTotal”).innerHTML = formatter.format(totalValuation);
document.getElementById(“valuationResult”).style.display = “block”;
// Smooth scroll to result for better UX
document.getElementById(“valuationResult”).scrollIntoView({ behavior: ‘smooth’, block: ‘nearest’ });
}

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