Business Valuation Calculator — the United States 2025-26
Estimating what your business is worth.
Estimate US business value with USD earnings, revenue multiples, EBITDA, owner add-backs, working capital, debt, and buyer context.
United States Business Valuation Notes
US small-business valuations often adjust for owner compensation, add-backs, inventory, working capital, lease obligations, customer concentration, and transferable earnings.
Use this version as a planning estimate before speaking with a CPA, business broker, SBA lender, or buyer about a sale or acquisition.
US setup: this business valuation is tuned for dollar-denominated scenarios, American payroll and tax references, state-by-state cost differences, and the finance terms people see in lender, employer, or IRS-facing documents.
The page keeps US language in place where it is relevant, including IRS, federal withholding, FICA, 401(k), sales tax, miles, APR, down payment, paycheck, state tax, and USD totals.
Treat the answer as a United States estimate; before acting, compare it with provider disclosures, state rules, federal guidance, lender underwriting, payroll settings, or advice from a qualified professional.
Indicative estimates only. Use a qualified business broker or CA for formal valuation. Not financial advice.
Select the question that matches where you are right now.
Your result shows indicative enterprise value — what a buyer might pay for the whole business including its debt. The equity value (what you receive) = enterprise value minus net debt. These are indicative estimates — actual sale prices vary significantly based on buyer competition, deal structure, and negotiation.
For most US SMEs, the final price is negotiated as a multiple of normalised EBITDA. The multiple reflects perceived risk and quality. A business generating $500k EBITDA at 4× is worth $2M — but if you can demonstrate it deserves 5× (through systems, contracts, or growth), that is worth an extra $500,000 in your pocket.
Enterprise value (EV) is the total business value. Equity value = EV minus net debt (loans minus cash). If your business is valued at $2M EV but has $300k in loans, the equity value you receive is $1.7M. Always clarify which figure is being quoted in any discussion with a broker or buyer.
Use Standard mode to enter revenue, then check whether the implied revenue multiple is reasonable for your industry. A $500k EBITDA business with $3M revenue at 4× EBITDA implies a 0.67× revenue multiple — reasonable for a service business. If your revenue multiple is very high or low relative to EBITDA, it signals something unusual about your margin profile.
The multiple is the most powerful lever — increasing it by 0.5× on a $500k EBITDA business adds $250,000 to the sale price. Here is how to earn a higher multiple.
Recurring revenue (subscriptions, retainers, maintenance contracts) dramatically increases the multiple. A business with 60%+ recurring revenue may attract 1–2× higher multiple than an equivalent business relying entirely on one-off transactions. Start converting ad-hoc clients to annual contracts 2–3 years before a planned sale.
The single biggest multiple killer is an owner who is the business. Hire or promote a general manager who can run day-to-day operations. Document key processes. Ensure clients have relationships with staff, not just with you. Buyers pay a significant premium for a business that does not require the seller to stay.
Buyers pay based on a 3-year EBITDA average. Three years before your target sale date: maximise normalised EBITDA (remove personal expenses, pay yourself market rate), resolve any IRS debt or compliance issues, tidy up customer contracts, and document all key processes and supplier agreements. A business with 3 years of clean, growing financials commands a premium — and the due diligence process is far smoother.
Understanding the US business sale process helps you prepare and avoid the common mistakes that erode sale price.
A good business broker adds significant value — qualifying buyers, running a competitive process, managing confidentiality, and structuring the deal. Broker fees are typically 4–6% of sale price for transactions under $5M. Interview 2–3 brokers before appointing. For transactions above $5M, an M&A adviser (investment bank or boutique) is more appropriate.
CGT on a business sale can be substantial, but the small business CGT concessions are generous. If you have held the business for 12+ months and net assets are under $6M, you may qualify for the 15-year exemption (zero CGT), retirement exemption (up to $500k CGT-free), or rollover. Always get advice from a CA specialising in M&A tax before starting the sale process — some concessions require steps taken before the contract is signed.
Expect buyers to request vendor finance (you lend 20–30% of the price, repaid over 2–3 years). This signals your confidence in the business continuing to perform. Earn-outs — where part of the price is contingent on future EBITDA — are common to bridge valuation disagreements. Get legal advice on earn-out structures; poorly drafted earn-outs are a common source of post-sale disputes.
If you are buying a business, this calculator shows you what you are paying and how to sense-check the asking price.
The most important due diligence task is verifying the normalised EBITDA. Request 3 years of tax returns, financial statements, and state sales tax filings. Have your CPA reconcile the EBITDA and identify any add-backs. Common manipulation: including one-off revenue in the run-rate, excluding real expenses as "personal", or inflating the final year before sale.
If you are using a loan to fund the acquisition, calculate your Debt Service Coverage Ratio (DSCR). Most lenders require DSCR of 1.25–1.5× (annual net profit ÷ annual loan repayments). For a $2M purchase at 7% over 7 years, annual repayments are $375k — you need $470k–$560k in post-acquisition net profit to satisfy most lender requirements.
Before buying, ask: Why is the owner selling? What happens if the top 3 clients leave? Is there an employment contract with the key staff? Are there any IRS debts or legal disputes? What is the lease term remaining? Can the business operate without the current owner within 6 months? The answers to these questions determine whether the multiple is justified.
EBITDA multiples, asset values, DCF — the four main methods used by US brokers
Method 1: EBITDA multiple (most common for SME)
Enterprise Value = EBITDA × multiple. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) is the standard measure of operating profitability used in US business sales. The multiple reflects risk, growth, and marketability. US SME multiples typically range from 2× to 6×, with tech and SaaS businesses attracting 8–15×.
Method 2: Net asset value (NAV)
The sum of the business assets minus all liabilities. This is the floor value — what the business is worth if wound up. Asset-heavy businesses (manufacturing, property, farming) often trade close to NAV. Service businesses with strong earnings usually trade at a premium to NAV (i.e., goodwill).
Method 3: Revenue multiple
Used for high-growth or subscription businesses where EBITDA may be low or negative. SaaS businesses typically trade at 4–10× ARR. The revenue multiple implies the buyer is paying for growth potential, not current earnings. This method is less common for traditional SMEs.
Method 4: Discounted Cash Flow (DCF)
Projects future cash flows and discounts them to present value using a risk-adjusted rate (WACC). Theoretically the most rigorous method, but requires reliable forecasts — rare for SMEs. More commonly used in large M&A deals, private equity, and for businesses with strong recurring revenue visibility.
| Method | Best for | Typical range (US) |
|---|---|---|
| EBITDA multiple | Profitable SMEs $500k–$50M revenue | 2–6× EBITDA |
| Revenue multiple | SaaS, subscriptions, high-growth | 4–10× ARR |
| Net asset value | Asset-heavy, property, farming | 1–1.3× book value |
| DCF | Large deals, PE-backed, strong forecasts | 12–20% WACC typical |
What multiple should your business attract? Industry benchmarks for US SMEs
| Industry / business type | Typical multiple | Key value drivers |
|---|---|---|
| SaaS / software | 8–15× EBITDA | Recurring revenue, low churn, scalability |
| Healthcare / medical | 5–8× EBITDA | Repeat patients, staff retention, location |
| Professional services (systemised) | 4–6× EBITDA | Client contracts, staff depth, recurring fees |
| Retail (online or physical) | 3–5× EBITDA | Brand, supplier terms, defensibility |
| Manufacturing | 3–5× EBITDA | IP, contracts, equipment condition |
| Trade / construction | 2–4× EBITDA | Contracts, staff, licensing |
| Hospitality / cafe / restaurant | 1.5–3× EBITDA | Lease terms, location, systems |
| Owner-dependent services | 1.5–3× EBITDA | Staff transition, key-person insurance |
What increases your multiple?
- Recurring or contracted revenue (subscription, retainer, contracts)
- Management depth — business runs without the owner
- Diversified customer base (no single client > 20% revenue)
- Strong growth trajectory (3-year revenue growth trend)
- Defensible IP, brand, licences, or location
- Clean financials and up-to-date tax obligations
What decreases your multiple?
- Owner-dependent operations — business is the owner
- Customer concentration — top 3 clients are 80%+ of revenue
- Declining revenue or inconsistent EBITDA
- IRS debt or compliance issues
- Poor lease terms, upcoming lease expiry
- Narrow buyer pool (specialised, licensed, niche)
How to calculate normalised EBITDA for a business sale in the United States
EBITDA formula
EBITDA = Net profit + Interest + Tax + Depreciation + Amortisation
Or equivalently: Revenue − COGS − Operating expenses (excluding ITDA)
Normalised EBITDA for M&A purposes
When selling a business, buyers and sellers typically work with normalised EBITDA — adjusted to remove one-off items and owner-specific costs. Common add-backs:
- Excess owner salary (above market rate for a manager to replace them)
- Owner personal expenses run through the business
- One-off legal costs, restructuring costs, or non-recurring expenses
- Related party rent at above or below market rates
- Non-arm's-length supplier or customer transactions
Example normalisation
| Item | Amount |
|---|---|
| Reported net profit | $280,000 |
| + Interest expense | $30,000 |
| + Tax (company rate) | $90,000 |
| + Depreciation | $40,000 |
| + Amortisation | $10,000 |
| = Reported EBITDA | $450,000 |
| + Owner salary add-back (excess) | $80,000 |
| + Personal expenses add-back | $20,000 |
| = Normalised EBITDA | $550,000 |
The sale process, CGT on business sale, vendor finance, and earn-outs in the United States
The typical US business sale process
- Prepare financials — 3 years of P&L, tax returns, normalised EBITDA
- Engage a business broker or M&A adviser (for larger deals)
- Prepare Information Memorandum (IM) — confidential marketing document
- Market to qualified buyers — NDAs required
- Indicative offers / Letter of Intent (LOI)
- Due diligence — buyer verifies financials, contracts, liabilities
- Negotiate final price and structure
- Legal documentation — Sale of Business Agreement (SBA)
- Settlement — funds transfer, key handover
- Transition period — seller remains for 3–12 months
Capital Gains Tax on business sale
When you sell a business in the United States, the profit is usually subject to CGT. Key concessions for small business owners: 50% CGT discount if held 12+ months (individuals and trusts); Small Business CGT Concessions — if the business has less than $6M in net assets (or turnover under $2M), you may qualify for the 15-year exemption, retirement exemption, or rollover. Always get tax advice from a CA before selling.
Vendor finance and earn-outs
In US business sales, it is common for the seller to provide vendor finance (typically 20–30% of the purchase price) repaid over 2–3 years. Earn-outs — where part of the price is contingent on future performance — are also common to bridge valuation gaps between buyer and seller expectations.
Frequently asked Frequently asked questions
What EBITDA multiple is typical for an US SME in 2025?
Most US SMEs sell for 2–6× EBITDA. The multiple depends heavily on: how owner-dependent the business is, revenue quality (recurring vs one-off), growth trajectory, industry, customer concentration, and management depth. Owner-dependent businesses attract 2–3×; systemised businesses with strong recurring revenue attract 4–6×. Tech and SaaS businesses can attract 8–15×.
What is the difference between enterprise value and equity value?
Enterprise value (EV) is the total value of the business — what a buyer pays for the whole business including its debt. Equity value = EV minus net debt (loans and overdrafts, minus cash). When buying a business, the buyer typically pays the equity value but assumes the business free of debt. Always clarify whether a quoted price is EV or equity value.
How is goodwill calculated when selling a business?
Goodwill = Enterprise value minus the fair value of tangible net assets. If your business is valued at $2,000,000 and has net tangible assets of $500,000, the goodwill component is $1,500,000. Goodwill reflects the value of brand, customer relationships, systems, staff, and earnings power above the asset base. CGT treatment of goodwill varies — get advice from a CA.
Do I need a formal business valuation to sell?
A formal valuation from a Chartered Business Valuator or CA with M&A experience is not legally required but is strongly recommended — especially for businesses valued above $500,000. A formal valuation helps justify your asking price, supports vendor finance arrangements, and may be required by the buyer's lender. Business brokers typically provide indicative valuations for free as part of their listing process.
Where these figures come from
Business figures on this page are drawn from The IRS (business tax), the US Small Business Administration (loan & program rules), and The Federal Reserve (commercial interest-rate data).
- Federal corporate & business tax — IRS — Businesses.
- Self-employment tax (15.3%) — IRS — Self-Employment Tax.
- Pass-through & QBI deduction — IRS — Qualified Business Income Deduction.
- Small-business loans & SBA 7(a) — SBA — US Small Business Administration.
- Commercial lending rate data — Federal Reserve — H.15 Selected Interest Rates.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.