Free Business Valuation Calculator
Estimate your company’s market enterprise value in under 60 seconds. Our algorithm benchmarks your revenue, EBITDA, and discretionary cash flow against 4,500+ live deal comps.
Non-operational expenses, personal vehicle, one-time items added back to earnings.
Conservative: $1.71M — Premium: $2.42M
How Business Valuation Works: The 3 Core Methodologies
ExitVelocity’s AI valuation models combine empirical lower-middle-market deal data with Wall Street investment banking methodologies. When valuing an operating company, institutional buyers evaluate three primary dimensions:
1. SDE Multiple Approach
Standard for owner-operated businesses with revenues under $5M. Multiplies Seller’s Discretionary Earnings (cash flow available to a single owner) by industry risk factor (typically 2.0x–4.0x).
2. EBITDA Market Multiple
Preferred by private equity, family offices, and search funds for companies with professional management. Evaluates enterprise value as a multiple of normalized operating cash flow (typically 3.5x–7.5x).
3. Discounted Cash Flow (DCF)
Projects free cash flows over a 5-year forecast horizon and discounts them back to present value using a Weighted Average Cost of Capital (WACC), plus terminal enterprise value.
Frequently Asked Questions
Essential questions business owners and acquisition searchers ask before valuing a company.
How is small business valuation calculated?
Small businesses with under $5M in revenue are primarily valued on a multiple of Seller’s Discretionary Earnings (SDE). Companies above $5M in revenue or institutional operations are valued on a multiple of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). The multiple is determined by industry, annual growth rate, owner dependency, customer concentration, and verifiable financial records.
What is the difference between SDE and EBITDA?
EBITDA represents pure operational profitability assuming market-rate executive compensation. SDE (Seller’s Discretionary Earnings) adds back one owner’s total compensation, discretionary perks (e.g. personal vehicle, owner health insurance), and non-recurring expenses to show the total cash flow an owner-operator can extract from the business annually.
What multiple of EBITDA is a business worth in 2026?
In 2026, lower middle-market businesses ($1M to $10M EBITDA) trade at median multiples between 3.5x and 6.5x EBITDA, depending on sector. Tech & B2B SaaS command 5.5x–8.0x, HVAC and essential home trades command 3.8x–5.2x, healthcare practices trade at 4.5x–6.0x, and traditional retail/restaurants trade between 2.5x and 3.5x SDE.
What add-backs are permitted when calculating SDE?
Permitted add-backs include: one owner-operator’s salary and bonus, personal automobile expenses used for business, owner health/life insurance premiums, one-time legal fees or facility moves, non-recurring equipment repairs, and non-operational travel or discretionary meals.
Can I generate a formal valuation report for SBA financing or M&A?
Yes. ExitVelocity generates institutional 15-to-30 page valuation packages including Discounted Cash Flow (DCF), comparable transaction analysis, sensitivity tables, and a Confidential Information Memorandum (CIM) teaser ready for banks, private equity, and search funds.
Go deeper on valuation
2026 industry multiples hub
EV/EBITDA, SDE, and revenue multiples across 10 lower middle-market sectors.
2026 example valuations
Worked SaaS, HVAC, healthcare, and manufacturing EV math.
SDE vs EBITDA explained
Which cash-flow metric buyers use for your size of business.
How AI business valuation works
What the model uses — and when to trust the range.
How this calculator works
Inputs, methodology, and how to interpret your result.
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