Small Business Valuation Calculator 2026: Estimate What Your Business Is Worth

Most financial planning decisions for business owners hinge on one number: what is your business worth? Estate plans need it. Retirement projections need it. Buy-sell agreements are only as good as the coverage that funds them. Yet most owners have never gotten a realistic estimate. This calculator uses SDE multiple data from over 9,500 actual small-business transactions to produce a planning-level range — adjusted for your industry, growth, and owner dependency.

SDE vs. EBITDA: which multiple applies to your business?

Seller's Discretionary Earnings (SDE) is the right metric for businesses where one owner works full-time and total value is under ~$5M. SDE equals:

Net profit + Owner's W-2 salary or guaranteed payments + Owner's personal benefits run through the business + Depreciation and amortization + One-time or non-recurring expenses

SDE captures the total economic benefit available to a buyer who replaces the seller as the owner-operator. For a consulting business netting $200K where the owner pays herself $150K in W-2 salary, SDE is $350K — not $200K.

EBITDA multiples apply when the business is large enough to operate with a professional management team that doesn't depend on the owner's personal labor — typically when EBITDA exceeds $1M–$2M. At that scale, buyers underwrite the business without the owner, so the owner's salary is irrelevant to valuation. This calculator uses SDE multiples, which are appropriate for the $100K–$3M SDE range that covers most small-business owners.¹

How SDE multiples work by industry

Across 9,500+ small-business transactions reported in 2025, the overall average SDE multiple was 2.5x — but industry variation runs from 1.5x to over 5.5x.² The four factors that most explain why two similar-revenue businesses trade at dramatically different multiples:

• Recurring vs. transactional revenue: Businesses with 50%+ recurring or contracted revenue trade at a 40–60% premium over project-based peers with identical SDE. A dental practice with mostly recurring hygiene appointments trades higher than one that depends on new-patient acquisitions.³
• Owner dependency: If you work 50 hours a week and you are the business — you hold the client relationships, you are the production bottleneck, and nothing moves without you — a buyer is pricing in the replacement cost and transition risk. High owner dependency is the single biggest valuation discount for main-street businesses.
• Growth trend: A business growing 20% per year commands 1.0–2.0x higher multiples than a flat or declining peer with identical current earnings. Buyers are buying future cash flows; historical growth is the best predictor of future earnings buyers can price.
• Business age and track record: Three years of consistent financials vs. seven years with stable client roster vs. fifteen years with a documented management team — each increment reduces buyer risk and expands the buyer pool.

Source: BizBuySell transaction database (9,500+ closed transactions, 2025); IBBA / M&A Source Market Pulse Q4 2025. SDE multiples reflect main-street and lower mid-market deals. Higher multiples may apply for businesses with exceptional growth, proprietary IP, or dominant local market position.

Business valuation estimator

How to increase your business value before a sale or planning event

The adjustments in this calculator are not just mathematical — they are the specific factors that professional buyers and appraisers actually use. Each one is changeable with lead time:

Reduce owner dependency (highest-value lever)

The single fastest way to increase your business's SDE multiple is to become less essential to it. Document your processes. Build a second-level manager who can handle client relationships. Create systems that don't require you to be present. A consulting firm whose revenue survives the owner's 60-day absence trades at a materially higher multiple than one that would collapse without the founder on every call. This takes 2–4 years to credibly demonstrate and show in financials — which is why exit planning advisors say to start 5 years before you want to sell.

Grow and document recurring revenue

Convert project-based clients to retainer relationships. Add annual maintenance contracts. Move to monthly subscriptions where the service model supports it. Buyers pay 40–60% more for businesses with predictable, contracted revenue streams — because it reduces their forecasting risk and lender risk in a financed acquisition.

Three years of clean, consistent financials

A business sale requires two to three years of clean tax returns and financial statements. Buyers and their lenders will normalize your financials — but they need the underlying records to do it. If you've been running a lot of personal expenses through the business (car, travel, cell, meals beyond business use), your CPA or financial advisor will help you document what's genuinely add-back SDE vs. what looks like personal benefit but actually reduces business transferability.

Customer and revenue concentration

If one customer represents more than 20–25% of your revenue, most buyers will either discount the multiple or require an earnout tied to that customer's retention post-close. Diversifying your customer base before a planned sale or planning event directly increases your valuation range.

Related planning tools

• Business Owner Retirement Readiness Calculator — model your business sale proceeds + retirement accounts against your spending target
• Selling Your Small Business: Tax Planning Guide — asset sale vs. stock sale, depreciation recapture, installment sales, QSBS §1202
• Small Business Succession Planning: Exit Strategy Roadmap — four exit paths, the 10-5-2-1 year planning timeline, and tax strategies by path
• Estate Planning for Small Business Owners: 2026 Guide — $15M exemption, LLC valuation discounts, QSST vs. ESBT, buy-sell interaction
• Key Person Insurance and Buy-Sell Agreements — proper funding methodology, Connelly v. US C-corp ruling
• C-Corp vs. S-Corp: When the C-Corporation Wins — QSBS §1202 $15M post-OBBBA exclusion and the $50M asset threshold

1. BizBuySell: SDE vs. EBITDA — What Business Buyers Should Use — explains the transition from SDE to EBITDA multiples at the ~$1M–$2M EBITDA threshold, with context on when each metric applies.
2. Sundance Financial: SDE Multiples by Industry 2026 — industry-level SDE multiple ranges drawn from BizBuySell closed transaction data (9,500+ transactions, 2025); overall average 2.5x SDE.
3. CT Acquisitions: SDE Multiples by Industry 2026 — recurring revenue premium data (40–60% over transactional peers) and industry-specific multiple ranges used in this calculator.
4. BizBuySell: Business Valuation Multiples by Industry — industry-specific SDE multiple ranges and key valuation driver analysis from actual closed transactions.

Multiple ranges reflect 2025–2026 market data. Business valuation is inherently fact-specific; this calculator produces planning-level estimates only, not formal appraisals. No regulatory values from IRS, SSA, or other government agencies are used in the valuation multiples shown — those are market-derived statistics from closed transaction databases. A certified business appraiser (ABV, CBA, or CVA) is required for formal appraisals used in estate filings, litigation, or funded buy-sell agreements. OBBBA estate/gift exemption $15M per IRS Rev. Proc. 2025-32 and OBBBA (July 2025). QSBS §1202 $15M exclusion cap and tiered holding period per OBBBA (July 2025).