What Is My Business Worth?

EBITDA (earnings before interest, taxes, depreciation, and amortization) is commonly used to measure profitability in larger companies. For many small businesses—especially those earning under $1M—valuation is often based on the owner’s benefit (also called Seller’s Discretionary Earnings / SDE). Owner’s benefit typically includes: Net income Plus depreciation and amortization Plus interest Plus the owner’s salary and owner-paid perks/benefits In simple terms, it reflects the cash flow available to one full-time owner-operator if the business were debt-free.

Yes—when they’re supported by real performance and clean documentation. In many small business sales, owners’ benefit (SDE) multiples often range from under 1x up to around 3x. For larger, more established companies—especially when EBITDA is near or above $1M—multiples may fall closer to 4x–6x. In general, multiples increase when a business has: Strong, verifiable earnings Clean, consistent financials Positive growth trends and a clear future outlook Lower operational risk and less owner dependency And multiples drop when there are: Poor or unclear books Declining performance or limited profitability Higher risk, uncertainty, or weak transferability

You can use every valuation method available and still see a gap between listing price and final sale price. No one—not your banker, CPA, attorney, broker, or even your mother-in-law—can predict the exact number with certainty. The only person who ultimately determines what your business is worth is the buyer, and that decision is always somewhat subjective—based on risk, confidence in the financials, and what they believe they can sustain after the transition.