What is Seller's Discretionary Earnings (SDE)?

SDE is a metric used to determine the true underlying cash flow of a small to mid-sized business. It adds back owner compensation and discretionary expenses to net income.

How does EBITDA differ from SDE?

EBITDA measures profitability before interest, taxes, depreciation, and amortization, generally used for larger companies. SDE adds back the owner's compensation and benefits.

How accurate is this valuation calculator?

This calculator provides an educational baseline based on industry averages and standard multiples. A certified valuation requires a deep dive into your specific financials.

Will my business valuation change over time?

Yes, market conditions, revenue trends, interest rates, and operational improvements all constantly impact your business's market value.

Why are multiples higher in certain industries?

Certain industries have higher barriers to entry, more recurring revenue, and better margins, making them lower risk for buyers and consequently demanding higher multiples.

What is a typical multiple for small businesses?

Most main street businesses trade between 2.0x and 4.0x SDE, varying heavily by industry, size, and owner dependence.

BUSINESS VALUATION

What's Your Business Worth?

Get a rapid, data-driven estimate of your company’s enterprise value using current market multiples and financial adjustments.

Annual Revenue

Annual SDE/EBITDA

Industry

Years in Business

Revenue Trend

Owner Involvement

Estimated Enterprise Value

$700,000 — $950,000

Valuation Multiples

Industry Base3.00x

Risk Adjustments0.30x

Adjusted Multiple3.30x

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These estimates are illustrative. Request a confidential consultation for a precise market assessment.

METHODOLOGY

How Business Valuations Work.

Business valuations in the lower-middle market rely heavily on cash flow multiples. Depending on your revenue tier, your business will typically be valued on either Seller's Discretionary Earnings (SDE) or EBITDA.

SDE accounts for the total financial benefit a single owner-operator derives from the business. We apply industry-specific multiples against this baseline, then apply discounts or premiums based on operational factors such as owner dependency, growth trends, and market durability.

SDE Method

Used for businesses under $5M in revenue. It adds the owner's salary, benefits, and one-time expenses back into the net income.

Multiple Factors

Multiples are not static. A recurring revenue model commands a higher multiple than a project-based business in the same exact industry.

Market Conditions

Interest rates, buyer demand, and macroeconomic trends dictate how aggressively buyers are willing to leverage debt, affecting your multiple.

VALUATION DRIVERS

Factors That Affect Business Value.

Revenue & Profit Trends

Consistent historical growth lowers risk for buyers, directly increasing the premium they will pay above standard industry multiples.

Owner Dependency

If the business relies entirely on the owner's personal relationships, buyers will heavily discount the valuation due to transition risk.

Customer Concentration

A single client accounting for more than 20% of your revenue exposes buyers to massive downside, driving valuations downward.

Industry & Market

Growing industries command higher multiples, while declining industries or those with low barriers to entry face steeper multiple discounts.

Growth Potential

Documented, actionable avenues for immediate expansion (such as unpenetrated local markets) allow sellers to argue for a future-value premium.

Operational Systems

Standard Operating Procedures (SOPs) and robust infrastructure enable a new buyer to take over seamlessly, significantly boosting your multiple.

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