Valuation
Business valuation: what is my business actually worth?
Not what a formula on the internet says, and not what a neighbour got. A real number comes from recast earnings, verified risk factors and what similar businesses in your county actually closed for.
How the number is built
- Recast earnings. Three years of returns and P&Ls converted into seller's discretionary earnings with documented add-backs.
- Risk assessment. Owner dependence, customer concentration, contract quality, staff tenure, lease terms, licence transferability, margin trend.
- Comparable sales. Closed transactions in your industry and region — not asking prices, which are frequently wishful.
- Multiple selection. Risk drives where you land inside the range. Two businesses with identical earnings can be worth very different amounts.
- Financing check. We test whether the price supports a lender's debt-service coverage, because a price no bank will finance is not a price.
What moves the multiple
- Recurring contracts vs one-off jobs
- Top customer under 15% of revenue
- A manager who can run it without you
- Documented, consistent gross margin
- Clean, reviewable books
- Assignable lease with real term left
- Trained, retained staff
- Trailing twelve months growth
Why an internet multiple gets you in trouble
Rule-of-thumb multiples ignore the risk factors that decide your outcome. Price too high and the business sits, ages, and eventually sells for less than a correctly priced one would have. Price too low and you leave real money behind.
Worse, a price that fails a lender's coverage test kills otherwise good deals in diligence — after months of buyer attention and disclosure.
Try the numbers yourself first
Our valuation calculator gives you an instant range from your revenue, earnings, tenure and recurring revenue mix. It is a starting point, not an opinion of value — but it will tell you whether your expectations are in the right neighbourhood.
Frequently asked questions
- How much is my business worth?
- Most owner-operated small businesses sell for a multiple of seller's discretionary earnings — commonly two to four times, with higher multiples for recurring revenue, low owner dependence and larger earnings. The multiple is set by risk, not by industry averages alone.
- What is the difference between SDE and EBITDA?
- SDE (seller's discretionary earnings) adds the owner's salary and benefits back into profit and is used for owner-operated businesses. EBITDA assumes a hired manager and is used for larger companies. Using the wrong one can misprice a business by a wide margin.
- Is the valuation free?
- Yes. A broker opinion of value costs nothing and carries no obligation to list. Formal certified appraisals for tax, litigation or partnership matters are separate engagements.
- What are add-backs?
- Legitimate expenses the business paid that a new owner would not carry: your compensation, personal vehicle, health insurance, one-time legal fees, non-cash depreciation. Each add-back needs documentation or a buyer's lender will strip it out.