Estimate the market value of your small business using the SDE Multiplier method.
1.5x – Small Retail / High Risk
2.0x – General Service / Local Business
2.5x – Healthy Professional Service
3.0x – Manufacturing / B2B Agency
4.0x – High-Growth / Specialized Tech
5.0x – SaaS / Recurring Revenue
Estimated Enterprise Value
$0.00
How to Value a Small Business
Valuing a small business is more of an art than a science, but the most common method for businesses with less than $5 million in revenue is the Seller's Discretionary Earnings (SDE) method. This calculator uses the SDE formula combined with an industry-specific multiple to estimate what a buyer might pay for your company.
What is SDE (Seller's Discretionary Earnings)?
SDE represents the total financial benefit a single full-time owner-operator derives from the business. To find this number, we start with the net profit and "add back" specific expenses that a new owner might not have or that directly benefit the current owner.
Net Profit: Your bottom line after all expenses.
Owner's Salary: The salary you pay yourself is a benefit of ownership.
Interest & Depreciation: Non-cash expenses or financing costs that vary by owner.
One-time Expenses: One-off legal fees, website redesigns, or equipment repairs.
Common Industry Multiples
The "Multiple" is a figure used to account for risk and growth potential. A business with recurring contracts or high barriers to entry gets a higher multiple than a business reliant on a single physical location.
Industry Type
Typical Multiples (of SDE)
Retail & Restaurants
1.5x – 2.5x
Digital Agencies / Marketing
2.5x – 4.0x
Manufacturing
3.0x – 5.0x
SaaS / Software
4.0x – 7.0x (of EBITDA/SDE)
Valuation Example
Imagine a local plumbing business with $600,000 in revenue and $450,000 in expenses (Net Profit: $150,000). The owner pays themselves a $100,000 salary and has $10,000 in depreciation. Their SDE is $260,000. If the industry multiple is 2.5x, the valuation is $650,000, plus the value of their trucks and inventory.
function calculateBusinessValuation() {
var revenue = parseFloat(document.getElementById('annualRevenue').value) || 0;
var expenses = parseFloat(document.getElementById('annualExpenses').value) || 0;
var salary = parseFloat(document.getElementById('ownerSalary').value) || 0;
var addBacks = parseFloat(document.getElementById('otherAddBacks').value) || 0;
var multiple = parseFloat(document.getElementById('industryMultiple').value) || 0;
var inventory = parseFloat(document.getElementById('inventoryValue').value) || 0;
// 1. Calculate Net Profit
var netProfit = revenue – expenses;
// 2. Calculate SDE (Seller's Discretionary Earnings)
var sde = netProfit + salary + addBacks;
// 3. Calculate Enterprise Value
var enterpriseValue = (sde * multiple) + inventory;
// Formatting currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0,
});
if (sde 0) {
document.getElementById('finalValuation').innerHTML = "Asset Value Only";
document.getElementById('logicBreakdown').innerHTML = "The business shows zero or negative discretionary earnings. Valuation is likely based strictly on liquidation value of assets: " + formatter.format(inventory);
} else if (revenue === 0) {
document.getElementById('finalValuation').innerHTML = "$0";
document.getElementById('logicBreakdown').innerHTML = "Please enter revenue figures to generate a valuation.";
} else {
document.getElementById('finalValuation').innerHTML = formatter.format(enterpriseValue);
document.getElementById('logicBreakdown').innerHTML =
"SDE: " + formatter.format(sde) + " (Profit + Add-backs) " +
"Calculation: (" + formatter.format(sde) + " x " + multiple + "x multiple) + " + formatter.format(inventory) + " inventory.";
}
document.getElementById('resultContainer').style.display = 'block';
}