Business Valuation Calculator

Estimate what a small business is worth from its earnings: SDE and EBITDA multiples, capitalized earnings and net assets

Updated 2026-10-02

Earnings

Pre-tax net profit (last 12 months)

Owner salary or draws

Owner perks run through the business

Interest expense

Depreciation and amortization

One-time expenses

Salary to hire a manager in your place

Your multiples (examples — use figures from sales like yours)

SDE multiple, low

SDE multiple, high

EBITDA multiple

Capitalization rate

Balance sheet

Tangible assets at fair value

Liabilities the buyer takes on

Estimated value range: $420,000.00 – $630,000.00
Seller’s discretionary earnings (SDE): $210,000.00
EBITDA: $140,000.00
SDE × 2: $420,000.00
SDE × 3: $630,000.00
EBITDA × 3.5: $490,000.00
Capitalized earnings (25% = 4.00×): $560,000.00
Midpoint of the earnings methods: $525,000.00
Net tangible assets (floor): $110,000.00

SDE = profit + owner pay + perks + interest + D&A + one-time. EBITDA = SDE − manager salary. Capitalized = EBITDA ÷ rate. Multiples and rate are your inputs, not market data.

Your numbers stay on this device. The page link keeps your inputs, so a bookmark or shared link reopens these results.

Start from the pre-tax profit on the books, add back what the owner takes out and the costs a buyer would not carry, and the calculator builds seller's discretionary earnings (SDE) and EBITDA. It then values the business three ways with multiples and a capitalization rate you set, and shows net tangible assets as a floor. The default numbers are an example, not market data; replace them with your own and with multiples from recent sales in your industry. Nothing is stored or sent.

Step 1: from net profit to SDE and EBITDA

Seller's discretionary earnings is what one full-time owner-operator takes out of the business: pre-tax net profit + the owner's salary or draws + personal or discretionary expenses run through the books + interest + depreciation and amortization + one-time costs that will not repeat.

In the example, $120,000 of net profit + $60,000 owner pay + $10,000 of perks + $5,000 interest + $15,000 depreciation = $210,000 SDE. EBITDA treats the owner as a hired manager instead: SDE minus a market salary to replace them. $210,000 - $70,000 = $140,000 EBITDA.

Step 2: three ways to put a number on it

The SBA lists five ways buyers price an existing business: the capitalized earning approach, the excess earning method, the cash flow method, the tangible assets (balance sheet) method and the value of specific intangible assets (SBA, "Buy an existing business or franchise", checked 2026-10-02). This calculator runs the three that need only the seller's own numbers.

Earnings multiple: SDE × a multiple, or EBITDA × a multiple. Owner-run firms are usually priced on SDE; larger firms with managers on EBITDA. At 2× to 3× SDE the example is worth $420,000 to $630,000; at 3.5× EBITDA, $490,000.
Capitalized earnings: EBITDA ÷ the return a buyer requires. At a 25% capitalization rate the example is worth $140,000 ÷ 0.25 = $560,000, the same as a 4× multiple.
Net tangible assets: equipment, inventory and receivables at fair value minus the debts that go with them. $150,000 - $40,000 = $110,000. A profitable business should sell above this; if the earnings methods come out lower, the earnings are the problem.

Example valuation (all multiples and rates are example inputs)
Method	Input	Value
SDE × low multiple	$210,000 × 2.0	$420,000
SDE × high multiple	$210,000 × 3.0	$630,000
EBITDA × multiple	$140,000 × 3.5	$490,000
Capitalized earnings	$140,000 ÷ 25%	$560,000
Net tangible assets (floor)	$150,000 - $40,000	$110,000

What moves the multiple

The multiple is where the judgment lives, and this page deliberately does not publish an "average". Buyers pay more for earnings that look likely to continue: several years of steady or growing profit, many customers rather than one big one, systems and staff that run without the owner, and a lease and contracts that transfer. They pay less when the owner is the business, when revenue is lumpy, or when the books are hard to verify.

For a sale, a loan or a partner buyout, get a formal valuation. The SBA page itself recommends having an attorney and an accountant help evaluate a purchase. Use this calculator to understand the levers before that conversation.

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Frequently asked questions

How do I calculate what my business is worth?

Work out seller's discretionary earnings (pre-tax profit plus owner pay, perks, interest, depreciation and one-time costs), then multiply by a multiple from recent sales of similar businesses. Cross-check with capitalized earnings and with net tangible assets as a floor.

What is SDE?

Seller's discretionary earnings: the total financial benefit to one full-time owner. It adds the owner's pay and discretionary expenses back to pre-tax profit, along with interest, depreciation and one-time costs.

What is the difference between SDE and EBITDA?

EBITDA subtracts a market salary for a manager to replace the owner; SDE does not. In the example, $210,000 SDE less a $70,000 manager is $140,000 EBITDA.

What multiple should I use?

One taken from recent sales of businesses like yours, from a broker, a valuation professional or a sales database. The 2×-3× SDE and 3.5× EBITDA in the example are placeholders to show the maths, not market figures.

How does a capitalization rate relate to a multiple?

They are inverses. A 25% capitalization rate is the same as a 4× multiple, and a 20% rate is 5×. A higher required return means a lower price.

Is this a formal appraisal?

No. It is a planning estimate. For a sale, a loan or a dispute, use a qualified appraiser; the SBA recommends an attorney and an accountant for any purchase.

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