How Much Can You Sell Your Business For?

Business Valuation Calculator

Determining a business’s value is not a simple task. It depends on factors such as profitability, revenue trends, industry demand, business size, owner dependence, customer and supplier concentration, operational efficiency, competitive positioning, brand value, legal history, intellectual property, and market conditions.

To make things easier, we provide a business valuation tool that gives you a very rough estimate.

How Business Value is Calculated

Determining the value of a business requires more than just a simple calculation. Buyers and investors rely on different valuation methods to estimate how much a company is worth based on its financial performance, assets, and market conditions. Below are the most common ways businesses are valued.

Earnings Multiples

One of the most widely used valuation methods involves applying a multiple to your company’s earnings. The multiple is determined based on factors such as industry, growth potential, and market conditions.

Small businesses (under $250K EBITDA): Typically sell for 1.5 – 2.5X EBITDA.
Mid-sized businesses ($250K – $750K EBITDA): Often valued at 2 – 3.5X EBITDA.
Larger businesses ($750K – $1.5M EBITDA): Usually command 3 – 5.5X EBITDA.
Businesses with over $1.5M EBITDA: Could be valued at 4 – 9X EBITDA or higher, especially in competitive auctions.

Revenue-Based Valuation

For some businesses, particularly those with high revenue and strong market positioning, valuation is based on a multiple of annual revenue.

Service businesses: Usually 1 – 2X annual revenue.
Technology and SaaS companies: Can range from 3 – 10X revenue, depending on growth rates.
Retail businesses: Typically fall between 0.5 – 2X revenue.

Discounted Cash Flow (DCF) Method

For businesses with predictable cash flows, a discounted cash flow analysis is used to project future profits and determine today’s value based on a “net present value” calculation. This method is especially relevant for larger, well-established companies.

Asset-Based Valuation

This approach is used when a company’s value is closely tied to tangible assets, such as equipment, inventory, and real estate. This method is most useful for manufacturing, retail, and capital-intensive businesses.

The valuation is calculated as:

Total Assets – Liabilities = Business Value

Where to Sell Your Business?

Choosing the right platform to sell your business depends largely on its size and profitability. Smaller businesses often find buyers through online marketplaces, while larger companies typically require brokers or investment banks to secure the best deals.

Under $250K in Profit

Online marketplaces for buying and selling online businesses connect small business owners directly with individual buyers. For businesses with under $250K in profit, these platforms are typically the only viable option, as brokers and M&A advisors rarely work with businesses in this range.

While sellers must handle their own marketing and negotiations, these marketplaces provide a cost-effective way to reach potential buyers.

250K - 5M in Profit

Business brokers specialize in finding qualified buyers and managing the entire sale process. When they do take on smaller businesses, they typically focus on those making at least $250K in profit.

A good broker handles marketing, negotiations, and paperwork while working to maximize the sale price and ensure a smooth transaction.

$5M+ in Profit

Investment banks and M&A firms specialize in high-value transactions for businesses generating over $5M in profit. They leverage extensive networks of corporate buyers and institutional investors to secure optimal valuations. These firms are best suited for complex, strategic acquisitions and mergers.