Business Sale Calculator

Selling a business is really two questions: what a buyer will pay, and what you actually keep after everyone else takes their cut. This business sale calculator answers both. It builds your SDE from profit and add-backs, applies the multiple range you choose, cross-checks the result against revenue, then subtracts broker commission and tax to estimate your net proceeds.

Quick Answer

How to use the business sale calculator

Fill in the eight fields with your own numbers, then click Calculate. The fields come pre-filled with the worked example so you can see the shape of a result immediately; your numbers replace them.

Start with annual net profit from your tax return or profit-and-loss statement, taken before owner salary and personal perks. Add your owner salary and add-backs: salary and draws, health insurance, the personal vehicle or phone run through the business, and any one-off expense a buyer would not repeat. The two add up to SDE, the earnings figure Main Street buyers actually price on.

Set your SDE multiple range as a low and a high number. The calculator deliberately does not suggest one: multiples are your judgment call, not a market fact the tool looked up. Enter annual revenue and a revenue multiple for the cross-check, then broker commission and your estimated tax rate on the sale. Click Calculate and the tool shows the sale range, SDE, revenue cross-check, midpoint, and net proceeds. Reset restores the example values. If anything is missing or out of range, the tool says exactly which field needs fixing instead of guessing.

The net proceeds formula, step by step

The calculator runs one chain of arithmetic, and every output on the results panel maps to one step:

Step 1: SDE. SDE = Net profit + Owner salary and add-backs. This is the total annual cash one owner-operator can pull from the business.

Step 2: Sale price range. Low = SDE times your low multiple. High = SDE times your high multiple. The range is the honest answer; any single "the value" number hides how much judgment sits inside the multiple.

Step 3: Revenue cross-check. Revenue times your revenue multiple. This is a sanity check, not a second valuation: if it lands far outside the SDE range, one of your inputs is telling a different story than the other.

Step 4: Midpoint. (Low + High) divided by 2. The working sale price the rest of the math runs on.

Step 5: Net proceeds. Midpoint times (1 minus commission percent) times (1 minus tax percent). This is the estimate of what lands in your account, and it is the number the whole page is built around.

Commission is applied before tax because you pay tax on what you actually receive, not on the headline price. With the example numbers: $360,000 midpoint, minus 10% commission ($36,000), leaves $324,000; minus 20% tax ($64,800), leaves $259,200.

What SDE means, and what the calculator adds back

SDE stands for Seller's Discretionary Earnings: the cash the business generates for one working owner in a year. A buyer who will run the business themselves asks one question, which is how much they can take home from it, and SDE is the closest single number to that answer. Net profit alone understates it because the current owner's salary, perks, and one-off costs all come out of profit before the buyer ever sees the books.

The calculator builds SDE the standard way: reported net profit, plus everything the owner takes out or spends personally through the business, plus non-recurring expenses a buyer would not face again. Common add-backs are the owner's salary and draws, health and life insurance paid by the company, a personal car or phone on the company account, travel that was really personal, and one-time legal or repair bills. The rule for each line item is simple: would the expense disappear or shrink under a new owner? If yes, add it back.

Be honest with add-backs and the valuation stays credible; inflate them and you are selling yourself a fantasy number no buyer will pay. If you want the valuation half of this question worked through on its own terms, our small business value calculator explores industry-multiple valuation in detail.

SDE or EBITDA: picking the earnings number buyers will use

Use SDE when the owner works in the business, which covers nearly every business under about $1 million in earnings. Use EBITDA when the business already has professional management in place and the owner's salary is a real market-rate cost that stays after the sale. The two metrics are not interchangeable, and applying one metric's multiple to the other metric's earnings is the most common way sellers talk themselves into a fantasy valuation.

Worked example: a $600,000 landscaping business

A landscaping company shows $95,000 of net profit. The owner takes a $25,000 salary and runs a personal vehicle through the business, so SDE is $120,000. The business has a small crew and repeat commercial contracts, so the owner sets the multiple range at 2.5 to 3.5 rather than taking a number from a table. Annual revenue is $600,000 with a 0.4 revenue multiple as a cross-check. Entered into the calculator above:

• SDE: $95,000 + $25,000 = $120,000
• Sale range: $120,000 times 2.5 = $300,000 to $120,000 times 3.5 = $420,000
• Revenue cross-check: $600,000 times 0.4 = $240,000, below the SDE range, which is normal for a labor-heavy service business and worth a second look at the inputs
• Midpoint: $360,000
• Net proceeds: $360,000 minus 10% commission ($36,000) minus 20% tax ($64,800) = $259,200

These are the exact figures the calculator produces with the default inputs. Notice how much of the headline number evaporates: the $420,000 top of the range becomes $259,200 in the owner's account, before any seller-financing discount or working-capital adjustment a buyer negotiates.

From sale price to your bank account: commission, tax, and the debt you still owe

The valuation range is what a buyer pays. Net proceeds are what you keep. The path from one to the other runs through three subtractions, and the worked example shows each one:

Broker commission is the first cut. Main Street brokers typically charge 8 to 12 percent on smaller deals, often on a sliding scale, so a 10% estimate is a reasonable starting point and the calculator warns you if you enter anything above 50%. Tax is the second cut and the harder one to estimate: asset sales can split the gain across ordinary income, depreciation recapture, and capital gains, each taxed differently. The IRS explains the gain-or-loss rules for business property in Publication 544, and long-term capital gains rates are set out in Tax Topic 409. For a finer-grained estimate of the tax side, run the numbers through a capital gains loss calculator with your own basis.

What competing calculators miss

Most free business valuation tools do one of two things: they apply a multiple and stop, or they bake a "typical" multiple into the tool with no source and no way to change the assumption. Either way you get a headline number and no sense of what survives to your bank account. This page is built to beat that in four ways.

First, one tool runs the whole chain: SDE build-up, multiple range, revenue cross-check, midpoint, then commission and tax to net proceeds. Rival tools split valuation and net proceeds across separate pages, or skip the proceeds question entirely, which is the only number a seller actually spends.

Second, the multiples are inputs, never facts. Plenty of calculators present a multiple range as if it were market data. This one refuses to: you set the low and high multiple, so the tool can never flatter you with an invented average. That is also why there is no multiple-by-industry table on this page; the honest answer is that your multiple is your judgment, and the tool says so on its face.

Third, the revenue cross-check is built in, not bolted on. Revenue multiples are a rough benchmark, useful mainly for spotting when your SDE inputs and your revenue story disagree. Keeping it as a visible second line, rather than a separate tool, makes the disagreement impossible to miss.

Fourth, the limits are stated, not hidden. The result is an estimate, not a formal appraisal; debt payoff is disclosed as a manual step rather than silently omitted; and every validation message names the exact field that needs fixing. The U.S. Small Business Administration's guide to closing or selling your business is the right next read once you have your number.

Frequently asked questions

Add This Calculator to Your Website

References