Business Valuation Calculator
Estimate how much a business could be worth using an earnings multiple. Enter annual EBITDA, your chosen valuation multiple, outstanding debt and cash reserves in the white box. The purple box updates automatically to show the estimated business value.
How the Business Valuation Calculator works
This calculator uses the EBITDA multiple method to estimate the value of a business. EBITDA stands for earnings before interest, taxes, depreciation and amortization.
The first step is to multiply annual EBITDA by the selected valuation multiple. This produces an estimated enterprise value.
Business valuation formula
Enterprise value = Annual EBITDA × Valuation multiple.
Estimated equity value = Enterprise value − Outstanding debt + Cash reserves.
Business valuation example
Suppose a business generates $150,000 in annual EBITDA and is valued at four times EBITDA.
Its estimated enterprise value would be $600,000. Subtracting $100,000 of debt and adding $50,000 of cash gives an estimated equity value of $550,000.
Choosing a valuation multiple
Valuation multiples vary significantly depending on the industry, business size, growth prospects, profitability, customer concentration, recurring revenue and overall business risk.
The multiple should ideally be informed by recent sales of comparable businesses. A higher multiple produces a higher estimated valuation, but does not guarantee that a buyer would pay that amount.
Important limitations
This simplified model assumes the selected EBITDA multiple represents enterprise value and that the entered debt and cash are appropriate for the enterprise-to-equity adjustment.
Actual transactions may require adjustments for working capital, non-operating assets, lease liabilities, one-off earnings, owner compensation and other financial obligations.
A negative equity value indicates that the debt adjustment exceeds the estimated enterprise value plus cash. It is a mathematical estimate, not necessarily the price or legal value of the ownership interests.
Results are illustrative estimates, not a formal business appraisal or investment recommendation.