Free Valuation Calculator
What is your business worth?
A business sells for a multiple of what it really earns for its owner. Enter your annual EBITDA below and this calculator returns the range a professional services business in that bracket has typically sold for: three to five times earnings. It is a starting point, not an offer. The method behind the number is in How Much Is Your Business Worth?
Quick Valuation Estimator
Enter your annual revenue and annual EBITDA. The estimate uses EBITDA; revenue is for context.
What the number means
Buyers do not pay for revenue and they do not pay for the profit on your tax return. They pay for what the business really earns once the accounting choices come out. That is the number this calculator multiplies.
EBITDA or owner earnings: which one do you have?
EBITDA is earnings before interest, taxes, depreciation and amortization. It is what a business earns before financing and accounting choices muddy it up. If you run the business yourself and pay yourself out of it, buyers will usually look at your owner earnings instead, sometimes called seller’s discretionary earnings or SDE, which adds your salary and the personal expenses the business pays back in.
The calculator takes EBITDA. If what you have is owner earnings, the range is still a fair place to start, and the difference between the two is exactly the conversation to have with someone who has priced a business like yours. Rebuilding that number properly is most of the work, and it is where most owners find value they did not know was there.
Why the range is wide
Three times and five times are far apart because two businesses with the same earnings can be worth very different amounts. Recurring revenue, a customer base that is not concentrated in a few accounts, and a business that runs without its owner sit at the top of the range. One big customer, one-time projects, and a business that stops when you do sit at the bottom.
What to do with it
- Rebuild your earnings with every add-back documented, not remembered.
- Separate recurring revenue from one-time revenue. Buyers will.
- Do not anchor on a broker’s teaser number. It is a marketing figure, not a valuation.
- Get a real range from someone who has closed deals in your category. You can see how that plays out on a real deal in our Colorado HVAC case study, and across the rest of our closed transactions.
When you are ready for a number with a buyer behind it, here is how selling with us works.
Frequently asked questions
How is this estimate calculated?
It multiplies your annual EBITDA by three and by five. That is the range a professional services business has typically sold for, and it is the same band our seller page has always used. Where a real business lands inside it depends on growth, how much revenue comes from a few customers, how much of it recurs, and how dependent the business is on its owner.
What is EBITDA, and what if I only know my profit?
EBITDA is earnings before interest, taxes, depreciation and amortization. It is a banker's way of saying profit before financing and accounting choices muddy it up. If you run the business yourself and pay yourself out of it, the number buyers actually look at is usually your owner earnings, sometimes called seller's discretionary earnings or SDE, which adds your salary and personal expenses back in. Our guide to how much a business is worth walks through how to rebuild that number from your tax return. Read the guide.
Is this the price my business would sell for?
No. It is a starting point. A valuation is what a real buyer will pay for what your business really earns, and most owners are worth more than their tax return makes them look once someone does the work to prove it. The only range that matters is the one buyers in your category are paying right now, and that comes from someone who has closed deals there.
What moves the number up or down?
Up: recurring revenue, a customer base that is not concentrated in a few accounts, a business that runs without you, and documented add-backs. Down: one or two customers making up most of the revenue, revenue that does not repeat, and a business that stops when the owner does.