Free Tool — Business Valuation
What is your business actually worth?
Whether you're planning a future sale, negotiating a partner buy-in, or just want to know where you stand — business value is a number you should know. Works for healthcare practices, trades and contracting businesses, and professional services firms. Run both valuation methods against your numbers in two minutes.
What a business is worth, answered
How small businesses are actually valued, what moves the number, and what an online estimate can and cannot tell you.
How is a small business valued?
Most commonly as a multiple of normalized earnings — seller's discretionary earnings for owner-operated businesses, EBITDA for larger ones with management in place — sanity-checked against an income approach and comparable transactions. The normalization matters more than the multiple: adjusting for owner compensation above or below market, one-time items, and personal expenses run through the business is what produces the earnings figure everything else is applied to.
What is the difference between SDE and EBITDA?
Seller's discretionary earnings adds the owner's full compensation and benefits back to earnings, on the theory that a buyer stepping into the owner's role captures it. EBITDA leaves market-rate management compensation as a cost, because a larger buyer will have to pay someone to do that work. Using SDE where EBITDA applies overstates value, and it is one of the most common errors in informal estimates.
What multiple should a business expect?
Ranges vary widely by industry, size, growth, and buyer type, and a number quoted without those qualifiers is not meaningful. The consistent pattern is that larger, faster-growing businesses with management depth and recurring revenue price above smaller owner-dependent ones in the same industry, and the spread within an industry is usually wider than the spread between industries.
What raises a business's value most?
Reducing dependence on the owner, more than any other factor — documented processes, a team that can run without the owner in the room, and revenue that does not follow the owner personally. After that: recurring or contracted revenue, customer or payer diversification, clean and substantiable books, and a credible growth trajectory. Each of these takes time, which is why value is built years before a sale rather than negotiated at one.
How accurate is an online valuation estimate?
It produces a range for orientation, not an appraisal. An estimate built from a handful of inputs cannot see customer concentration, contract terms, lease obligations, working capital needs, deferred maintenance, or the quality of the underlying records — all of which move real transaction prices materially. Treat the output as a starting point for a conversation, not a number to plan a transaction around.