Active95US Market Approach Tool
Business Valuation Calculator
Estimate a market-based value range for an owner-operated business using normalized SDE, annual revenue, and multiples derived from relevant completed business sales.
Business Valuation Calculator
Estimate a market-based value range using normalized SDE, revenue, and multiples derived from relevant comparable business sales.
Disclaimer: This calculator provides an informal market-based estimate, not a certified appraisal, broker opinion of value, or recommendation of asking price. Comparable transactions, asset treatment, deal terms, and business-specific risks require professional review.
Comparable-sales value estimate
Business Valuation Report
Business & weighting
Value indications
Comparable multiples and adjustments
Use completed sales from a sufficiently similar industry, size range, geography, and period. Remove irrelevant transactions and defensible outliers, and confirm whether inventory is included in each reported sale price.
How the calculation works
Revenue and normalized SDE are multiplied by the low, median, and high comparable-sale multiples. Each pair of indications is reconciled using the selected weighting, then inventory and other net adjustments are applied.
How to interpret the range
The midpoint is a blended market indication, not a guaranteed sale price. Differences between the SDE and revenue approaches may signal unusual margins, inconsistent financials, growth or decline, or comps that need further refinement.
Important limitations
- For-sale listings are not equivalent to completed-sale comps.
- A small sample may not represent the market reliably.
- Growth, concentration, management depth, lease terms, assets, and deal structure can create premiums or discounts.
- Real estate should generally be valued separately unless the selected comps consistently include it.
This informal estimate is for educational and planning purposes only and is not an appraisal, valuation engagement, tax opinion, or assurance of achievable sale price.
How the Business Valuation Calculator Works
This calculator applies the market approach, also called the comparable-sales or done-deals approach. It develops separate value indications from normalized SDE and annual revenue, then reconciles them using the weighting you select.
- SDE method: Normalized SDE multiplied by comparable-sale SDE multiples.
- Revenue method: Annual revenue multiplied by comparable-sale revenue multiples.
- Reconciled value: The weighted combination of both indications, adjusted for separately treated inventory, assets, or liabilities.
Example Valuation
A business with $1,000,000 in annual revenue and $250,000 in normalized SDE is evaluated using a median SDE multiple of 2.5× and a median revenue multiple of 0.40×. With 70% weight on SDE and 30% on revenue, the reconciled midpoint indication is $557,500 before inventory or other adjustments.
Selecting Useful Comparable Sales
Reliable multiples require completed transactions that are reasonably similar in industry, business model, size, location, financial performance, and sale period. Review SIC or NAICS classifications, remove businesses that are not truly comparable, exclude records without the financial measure being analyzed, and investigate outliers rather than accepting them automatically.
Confirm whether each database includes or excludes inventory and other assets in the reported sale price. Asking prices and current listings should not be treated as equivalent to completed-sale evidence.
Where to Research Comparable-Sale Multiples
Use transaction databases and sold-business reports to research current industry multiples. Access, coverage, definitions, and asset treatment vary, and some services require a paid subscription.
- ValuSource Market Comps: Private small- and middle-market transaction data searchable by SIC and NAICS classifications.
- DealStats by Business Valuation Resources: Private and public company transaction details and valuation multiples.
- PeerComps: Small-business transaction data sourced from SBA-backed transactions.
- BizBuySell Valuation Reports: Sold-business comparisons and listing data for many Main Street business categories.
Important: Prefer completed-sale data when estimating value. Asking-price listings can help assess market positioning, but they do not prove the price at which a business actually sold.
Frequently Asked Questions
Why use both SDE and revenue multiples?
The two methods provide different perspectives. A large difference between them may reveal unusual profit margins, inconsistent financial reporting, or comparable transactions that need refinement.
How many comparable sales are enough?
There is no universal minimum. Five may sometimes be usable, but a larger set of genuinely comparable transactions is generally more informative than a small or loosely related sample.
Does the result include inventory?
Only if you enter inventory as a separate adjustment. Check how the source database treats inventory before adding it to avoid double counting.
Is the midpoint the recommended asking price?
No. Growth, customer concentration, management depth, lease terms, equipment condition, working capital, deal structure, and current buyer demand may justify a premium or discount.
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Disclaimer: This calculator and related content provide an informal educational estimate only. They are not a certified appraisal, broker opinion of value, tax opinion, investment advice, or assurance of achievable sale price. Consult qualified valuation, accounting, tax, and legal professionals.