How much is my business worth?

The quick answer

Almost every privately held business is priced the same way. You take a measure of yearly profit and multiply it by a number that reflects what buyers pay for a dollar of profit in your industry. That's the earnings-multiple method, and it's how most small and lower-middle-market deals actually get priced.

So the formula is simple:

Business value ≈ annual earnings × industry multiple

A business making $500,000 in profit, in a sector where companies change hands around 4x, is worth roughly $2 million as a starting point. Everything else moves you up or down from that anchor. Your growth rate, your margins, how much the business leans on you.

Want the number for your business right now? Our free business valuation calculator applies real industry multiples to your earnings and gives you an indicative range. You can estimate it in seconds, no email required.

SDE vs. EBITDA: which profit number do you use?

The "earnings" in the formula isn't your top-line revenue and it isn't the profit on your tax return. It's an adjusted profit figure, and which one you use depends on the size of your business.

SDE (Seller's Discretionary Earnings) is for owner-operated businesses, generally under about $1 million in earnings. You start with net profit, then add back the owner's salary, personal expenses run through the business, and one-time costs. SDE answers the question a single buyer-operator cares about: "How much money will this business put in my pocket if I run it?"

EBITDA (earnings before interest, taxes, depreciation, and amortization) is for larger businesses that already have a management team. It strips out financing and accounting decisions to show the underlying operating profit, which is what private equity and strategic buyers compare across deals.

One thing trips people up constantly. SDE multiples look lower than EBITDA multiples, but they're not measuring the same thing. SDE already includes the owner's pay, so a smaller multiple is applied to a bigger profit number. If you're near the $1–2 million line, run both and see where they land.

What multiple should you expect?

This is where the answer stops being one number. Multiples vary widely by industry and risk. As a rough orientation, very small or thin-margin businesses (think restaurants or general retail) tend to trade in the low single digits on SDE. Steady, established service businesses sit in the middle. Recurring-revenue or roll-up-favored sectors like software, managed IT, insurance agencies, and pest control can reach high single-digit or low double-digit EBITDA multiples, because buyers pay a premium for predictable, contracted cash flow.

These are indicative ranges, not quotes, and they shift with the market. For the full breakdown by sector, see our EBITDA & SDE multiples by industry report, which lays out typical ranges and the reasoning behind them.

What raises or lowers your number

Two businesses with identical earnings can sell for very different prices. The gap comes down to risk and quality of earnings. Here's what pushes you toward the top of your range:

• Growth. Consistent year-over-year revenue growth is the single strongest driver of a higher multiple. Buyers pay up for momentum.
• Recurring revenue. Contracts, subscriptions, and service agreements make cash flow predictable, which is worth real money.
• Healthy margins. Margins that beat your industry peers signal a well-run operation and justify a premium.
• A diversified customer base. If any single client is more than roughly 15–20% of revenue, buyers discount for the risk of losing them.
• Low owner dependence. A business that keeps running when you take a month off is worth more than one that is you. This is the factor owners underestimate most.
• Clean financials. Reviewed or audited books and documented add-backs survive due diligence. Messy records get picked apart, and the price comes down with them.

The flip side is just as true. Declining revenue, customer concentration, deferred maintenance, and a business that can't function without the owner all drag the multiple down, sometimes below the bottom of the published range.

Why a calculator is only a starting point

A valuation calculator is genuinely useful for one thing: orienting you. It tells you whether your business is probably worth $1 million or $10 million, which is enough to start planning. What it can't do is hand you a number a buyer will accept.

That's because the things that actually set your final price aren't visible to a formula: the quality of your revenue, your growth trajectory, how concentrated your customers are, and what similar businesses are selling for right now. Two pest control companies with the same EBITDA can be worth a couple of multiples apart based on contract mix and route density alone. A calculator can't see any of that.

So use the estimate the way it's meant to be used. Get your range, understand the levers, and then get a human who knows your industry to pressure-test it.

How to get a real valuation

An accurate, defensible valuation comes from an M&A advisor who closes deals in your specific industry and can compare your financials against live market comparables. That person knows what buyers are paying this quarter, where the discounts hide, and what a few operational changes could do to your number before you go to market.

If you're thinking about selling, our guide to selling your business walks through the full process. And when you're ready for a real figure, getting matched with a vetted advisor (including no-retainer options) gets you a free, confidential indicative valuation as part of the process.