Business Valuation Calculator

What is a free business valuation calculator online?

A free business valuation calculator online estimates what a small business might be worth using industry multiples. You enter your annual revenue, your EBITDA (or your net profit, if that is your most useful earnings figure), and the industry your business operates in. The calculator applies the typical EBITDA multiple range for that industry and returns a low-mid-high valuation range. It also shows a sensitivity table — how the value changes if you apply a higher or lower multiple — so you can see the impact of a stronger or weaker negotiation position.

This business valuation calculator goes beyond a single multiple. It adjusts for three factors that materially move the multiple in real transactions: the percentage of recurring revenue (which pushes the multiple up), the growth rate (which pushes it up further), and customer concentration (which pulls it down if a single customer accounts for a large share of revenue). It also shows an asset-based valuation (net asset value) as a sanity check — the floor below which a business is usually not sold, because it would be cheaper to buy the assets separately. Everything runs in your browser — no sign-up, no account, no upload, no tracking.

How to use this free business valuation tool

1. Enter your annual revenue and your annual EBITDA. If you do not have an EBITDA figure, use your pre-tax operating profit plus back depreciation and amortization.
2. Select your industry. The calculator uses the typical EBITDA multiple range for that sector.
3. Enter the percentage of recurring revenue — revenue that repeats without having to be re-won each year, such as subscriptions or long-term contracts.
4. Enter your annual growth rate — the percentage increase in revenue over the last twelve months.
5. Enter your customer concentration — the percentage of revenue from your largest single customer.
6. Optionally enter a net asset value for the asset-based sanity check.
7. Click Estimate valuation. The tool shows a low-mid-high range, the sensitivity table and the asset-based floor.

How small businesses are valued

There are several methods, but for most small businesses the practical choice is between three approaches:

For most small businesses, the multiple-of-earnings method (EBITDA or SDE) is the standard, and the multiple ranges are well documented by industry. This calculator uses the EBITDA method as its primary approach because it is comparable across businesses in the same sector.

EBITDA multiples by industry (typical ranges)

What pushes a multiple up or down

Two businesses with the same EBITDA can sell for very different multiples. The factors that matter most in real transactions:

• Recurring revenue. The higher the percentage of revenue that repeats without re-selling, the higher the multiple. A SaaS business with 90% recurring revenue typically sells for 2–3x the multiple of a project-based services business of the same size.
• Growth rate. A business growing 30% per year commands a materially higher multiple than one growing 3%. Growth is the single biggest multiple lever in most sectors.
• Customer concentration. If one customer is more than 20% of revenue, buyers discount the multiple to reflect the risk that the customer leaves post-sale. Above 40% concentration, some buyers will not proceed at all.
• Recurring gross margin. Higher-margin revenue is worth more per dollar. Software gross margins of 80%+ support higher multiples than services gross margins of 30–50%.
• Management depth. A business that depends entirely on the founder is worth less than one with a functioning leadership team. Buyers pay for a business that runs without them.
• Clean financials. Businesses with audited or accountant-prepared financials command a premium. Cash-based bookkeeping is a discount.
• Size. Larger businesses command higher multiples within an industry. A $500k EBITDA business often sells for 3–4x; a $5M EBITDA business in the same sector often sells for 6–8x. This is called the size premium.

Why EBITDA is not the same as cash flow

EBITDA is a proxy for operating cash flow, but it is not actual cash flow. It excludes interest (which you may be paying), taxes (which you will pay), and capital expenditure (which you will spend). A capital-intensive manufacturer with strong EBITDA but constant equipment replacement has less real cash flow than the EBITDA figure suggests. When evaluating a business, look at both EBITDA and free cash flow — EBITDA minus capital expenditure minus tax. The two can diverge significantly.

Asset-based valuation as a floor

An asset-based valuation estimates the business by adding up the value of its tangible assets — cash, inventory, receivables, equipment, property — minus liabilities. For asset-heavy businesses, this can be the primary method. For service businesses, it is usually a floor. If the multiple-based valuation falls below the net asset value, a buyer would normally prefer to buy the assets separately, so the asset value becomes the practical minimum sale price.

Common mistakes when valuing a small business

• Using the wrong earnings figure. EBITDA, SDE and net profit are different things. Applying an EBITDA multiple to net profit overstates the value; applying a revenue multiple to a low-margin business overstates it dramatically.
• Using a national average multiple. Multiples are industry-specific and size-specific. A 2x multiple is normal for a small retail shop and absurdly low for a SaaS business.
• Ignoring adjustments. Owner perks, above-market rent to a related party, one-off revenue, and non-recurring costs all need to be normalized before applying a multiple.
• Forgetting working capital. Most deals assume a normal level of working capital (receivables, inventory, payables) is included in the sale. If the seller strips working capital, the effective price changes.
• Treating the midpoint as the answer. Valuation is a range, not a point. Two reasonable buyers can arrive at figures 30% apart for the same business.
• Confusing a valuation with a market test. A multiple-based estimate tells you roughly what the business could be worth if it were sold in an orderly market with a competitive process. A quick private sale to a single buyer typically achieves less.

Frequently asked questions