Business Valuation Calculator
Estimate a business's enterprise and equity value from its earnings (SDE or EBITDA), a valuation multiple you provide, cash, and debt.
Estimated equity value
$845,000
$250,000 SDE × 3.5
Enterprise value
$875,000
Cash + debt adjustment
-$30,000
The multiple is entirely up to you — this tool does not look up or assume an industry-specific figure, since real multiples vary enormously by industry, growth rate, business risk, and current market conditions (very roughly, small local-service businesses often trade at low single-digit multiples of SDE, while higher-growth or recurring-revenue businesses can trade at much higher multiples of EBITDA). Enterprise value is earnings × multiple; equity value adjusts that by subtracting debt and adding cash, since a buyer typically pays for the business's earning power but separately accounts for what it owes and what it already holds in the bank.
About this tool
How to use it
- Pick which earnings metric you're using — SDE (Seller's Discretionary Earnings, common for small owner-operated businesses) or EBITDA (more common for larger or investor-owned businesses).
- Enter the annual earnings figure and the valuation multiple you want to apply — the multiple is entirely up to you; this tool doesn't look one up automatically.
- Enter cash on hand and total debt, if you want the equity value adjusted for them.
- Press Calculate Valuation, or just keep typing — the results update live.
Why it matters
The 'earnings times a multiple' method is the most common quick way to estimate what a business is worth, but doing it correctly means using the right earnings figure, applying a multiple that actually reflects the business's risk and growth profile, and then adjusting for cash and debt to go from the value of the business's operations to the value an owner would actually walk away with.
When to use it
Useful for a rough sense of what a small business might sell for, for sanity-checking a broker's or buyer's valuation against your own numbers, or for seeing how sensitive the estimated value is to the multiple you assume.
Good to know
This tool deliberately does not supply or assume a multiple for any industry — real multiples vary enormously by industry, growth rate, customer concentration, owner dependence, and current market conditions, and using a wrong or outdated multiple would make the result meaningless. Enter a multiple you've sourced from a real comparable transaction, a business broker, or an industry report. Enterprise value is earnings × multiple; equity value further subtracts debt and adds cash, since a buyer is generally paying for the business's earning power but separately settles what it owes and keeps what it holds in cash.
Common questions
What multiple should I use?
This tool doesn't supply one — real valuation multiples vary enormously by industry, growth rate, and market conditions, and using an unsourced multiple would make the result meaningless. Source a multiple from a real comparable sale, a business broker, or an industry valuation report for your specific type of business.
What's the difference between SDE and EBITDA?
SDE (Seller's Discretionary Earnings) adds back the owner's own salary and other owner-specific benefits to profit, and is the standard earnings metric for small, owner-operated businesses. EBITDA (earnings before interest, tax, depreciation, and amortization) is more standard for larger businesses with a management team separate from ownership, since it doesn't need an owner-salary add-back.
Why does the tool subtract debt and add cash?
Enterprise value (earnings × multiple) represents what the underlying business operations are worth. Equity value — what an owner would actually receive — further accounts for debt the business owes (subtracted, since a buyer typically either assumes or pays off that debt) and cash it already holds (added back, since that cash belongs to the seller regardless of the deal structure).
Is this a substitute for a professional business valuation?
No — this is a quick estimate using one common method. A formal valuation (for a sale, litigation, estate planning, or financing) typically uses multiple methods, adjusts earnings for one-time or non-operating items, and is prepared by a qualified valuation professional or business broker.