Small Business Appraisal Calculator
Selling, buying, or just curious what the business you built is actually worth? This small business appraisal calculator estimates market value three ways professionals use every day: the SDE multiple for owner-operated businesses, the EBITDA multiple for larger or manager-run companies, and the revenue multiple for a quick sanity check. Enter your financials, pick a method, and set a multiple to get an indicated value with a realistic low-high range. For a deeper dive into one approach, see our small business value calculator; the market approach valuation calculator covers comparable-sales thinking.
An estimate for planning and negotiation, not a certified appraisal. Formal valuations are needed for disputes, divorce, or estate settlement.
Quick Answer
With $183,000 of net income, $95,000 of owner salary, $18,000 of owner benefits, and $35,600 of add-backs (depreciation, interest, one-time costs), SDE comes to $332,000. At a 2.75x multiple, the indicated value is $913,000, with a realistic range of $730,400 to $1,095,600. Change the method or multiple above to see your own range.
How the SDE multiple works
SDE (Seller’s Discretionary Earnings) = net income + owner salary + owner benefits + depreciation and amortization + interest + one-time add-backs. It measures the total economic benefit one owner-operator takes from the business. Multiply SDE by an industry multiple, usually 2.0x to 4.0x, and you get the price a buyer would pay for the whole operation. This is the standard approach for profitable small businesses because it reflects what the buyer actually steps into: the owner’s job and the owner’s profit, combined.
The multiple is where judgment lives. It compresses everything about risk into one number: customer concentration, owner dependence, growth, recurring revenue, and how clean the books are. Two businesses with identical SDE can sell at very different multiples, which is why the calculator shows a range rather than pretending one number is the answer.
Worked example: $332,000 SDE at 2.75x
A landscaping business reports $183,000 of net income. Add back the $95,000 owner salary, $18,000 of owner health insurance and vehicle costs, $12,000 of depreciation, $6,400 of interest, and $17,600 of one-time legal and personal costs. SDE = $332,000. The business is somewhat owner-dependent but growing, with clean books, so 2.75x is fair: $332,000 x 2.75 = $913,000, with a planning range of $730,400 to $1,095,600. These are the pre-filled values, so Calculate reproduces them exactly.
SDE vs EBITDA vs revenue: which method fits
Under about $5M in revenue with an owner-operator, use SDE. Above that, or with hired management in place, use EBITDA, because the buyer will pay a manager instead of working the job themselves. The revenue multiple is only a cross-check: it ignores margins, so a 20%-margin business and a 5%-margin business with the same sales get the same answer, which is wrong.
SDE multiple
- Built for owner-operated small businesses
- Captures the owner’s full economic benefit
- Most comparable sale data is quoted in SDE
Watch out
- Overstates value if the owner works 70-hour weeks a buyer will not
- Add-backs need documentation or buyers reject them
EBITDA multiple
- Standard for larger and manager-run companies
- Strips out financing and accounting choices
- Bridges cleanly to equity value: subtract debt, add cash
Watch out
- Understates value for true owner-operators
- Ignores the owner salary a small buyer must replace
Our valuation percentage calculator helps when you own a slice rather than the whole business, and the debt to EBITDA ratio calculator shows how leverage affects what a buyer can actually finance.
What moves your multiple up or down
The multiple is negotiated, not looked up. These are the factors buyers and brokers weigh when they argue for 2x versus 4x:
| Factor | Lower multiple (2.0 – 2.5x) | Higher multiple (3.0 – 4.0x) |
|---|---|---|
| Owner dependence | Business runs on the owner | Systems and staff run it |
| Revenue trend | Flat or declining | Growing 5%+ a year |
| Customer concentration | Top client over 30% | No client over 10% |
| Recurring revenue | One-off project sales | Contracts and subscriptions |
| Books | Cash transactions, gaps | Clean, reviewed financials |
If three or more rows on your business sit in the left column, price toward the low end of the range and fix what you can before going to market. A business growth percentage calculator check on your last three years tells you honestly which column your trend belongs in.
Key takeaways
- SDE is the standard base for owner-operated businesses; EBITDA for larger or manager-run ones.
- Value = base x multiple, then plan around a ±20% range, not a single number.
- Document every add-back; undocumented add-backs get thrown out in diligence.
- The multiple reflects risk: concentration, owner dependence, growth, and recurring revenue move it.
What competing calculators miss
Most free valuation tools ask for revenue and one multiple and print a number. They never build SDE from add-backs, so the number they multiply is wrong before the multiple is even chosen. They skip the debt-and-cash bridge to equity value, which is what the seller actually walks away with. And none of them explain what moves the multiple, leaving users to type in 3x because it felt right. This page does all three, because an appraisal without a defensible earnings base and a reasoned multiple is just arithmetic.
Frequently asked questions
Seller’s Discretionary Earnings multiplied by an industry multiple, usually 2.0x to 4.0x. SDE is net income plus owner salary, benefits, depreciation, interest, and one-time add-backs: the total benefit one owner-operator draws from the business.
SDE for owner-operated businesses, roughly under $5M in revenue, where the buyer replaces the owner. EBITDA for larger or manager-run companies, where the buyer hires management. The calculator computes both so you can compare.
Most small businesses sell between 2.0x and 4.0x SDE. Service businesses with recurring revenue and low owner dependence reach the top of that band; project-based, owner-dependent businesses sit at the bottom.
Expenses a new owner would not incur: the owner’s salary and personal benefits, one-time legal or repair costs, personal vehicles or phones run through the business, and non-cash depreciation. Each needs documentation to survive buyer diligence.
Because the multiple is negotiated. The ±20% range reflects how two reasonable buyers can disagree on risk and still both be right. Use the range for planning; the point estimate for opening a conversation.
The multiple gives enterprise value: the operating business. Equity value, what the seller keeps, subtracts debt and adds cash. The calculator shows the equity bridge when you use the EBITDA method.
Only as a rough cross-check. Revenue multiples ignore profit margins, so they overvalue low-margin businesses and undervalue high-margin ones. Always anchor on an earnings-based method.
For planning, negotiation, or a listing price, this estimate is enough. For partnership disputes, divorce, estate tax, or SBA lending, hire a certified appraiser; the number has to survive challenge.
Heavily. If customers, suppliers, or know-how live in the owner’s head, buyers discount for transition risk. Documented systems and a team that runs daily operations are worth real multiple points.
Yes, but carefully. Consistent 5%+ annual growth supports the top of the multiple band; one good year does not. Buyers pay for the profit that exists, with growth as a tiebreaker, not the price driver.
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References
- U.S. Small Business Administration. “Buy an existing business or franchise” Buy an existing business or franchise (Accessed Oct 18, 2026).
- U.S. Small Business Administration, Office of Advocacy. “Advocacy Research” Advocacy Research (Accessed Oct 18, 2026).
- U.S. Census Bureau. “Statistics of U.S. Businesses” Statistics of U.S. Businesses (Accessed Oct 18, 2026).
- U.S. Census Bureau. “Economic Census” Economic Census (Accessed Oct 18, 2026).
- Internal Revenue Service. “Publication 535, Business Expenses (Guide to Business Expense Resources)” Publication 535, Business Expenses (Guide to Business Expense Resources) (Accessed Oct 18, 2026).
- Internal Revenue Service. “Publication 538, Accounting Periods and Methods” Publication 538, Accounting Periods and Methods (Accessed Oct 18, 2026).
- Federal Reserve Banks. “Small Business Credit Survey” Small Business Credit Survey (Accessed Oct 18, 2026).
- U.S. Chamber of Commerce. “Small Business Resources” Small Business Resources (Accessed Oct 18, 2026).
- Financial Industry Regulatory Authority. “Stocks: What to know” Stocks: What to know (Accessed Oct 18, 2026).
- Internal Revenue Service. “Self-Employed Individuals Tax Center” Self-Employed Individuals Tax Center (Accessed Oct 18, 2026).