Business Valuation Calculator
Value a business three ways: earnings multiple, discounted cash flow with a Gordon growth terminal value, and net asset value. Compare the resulting range.
1. Earnings multiple
2. Discounted cash flow
| Year | Projected cash flow | Discount factor | Present value |
|---|---|---|---|
| 1 | $381,600 | 0.8475 | $323,390 |
| 2 | $404,496 | 0.7182 | $290,503 |
| 3 | $428,766 | 0.6086 | $260,960 |
| 4 | $454,492 | 0.5158 | $234,422 |
| 5 | $481,761 | 0.4371 | $210,582 |
The terminal value is 51.3% of the whole DCF answer. If that share is above about 70%, the valuation rests mostly on an assumption about the far future rather than on your projections.
3. Asset-based (book value)
multiple method = earnings × multiple · DCF = Σ CFₜ ÷ (1+r)ᵗ + TV ÷ (1+r)ⁿ · TV = CFₙ × (1+g) ÷ (r − g) · asset method = assets − liabilities
Worked example of the terminal value: a final-year cash flow of $100 with a 10% discount rate and 2% terminal growth gives 100 × 1.02 ÷ (0.10 − 0.02) = $1,275. And five flat years of $100 discounted at 10% come to $379.08, the textbook 3.790787 annuity factor.
Three methods will rarely agree, and that spread is the useful output — a wide gap usually means the business is worth very different amounts to different buyers. The multiple you type in matters more than anything else here, and real multiples vary enormously by sector, size, customer concentration and how much the business depends on the owner. A DCF is only as good as the cash flow forecast behind it. This is a planning estimate, not a formal valuation or financial advice; for a sale, a tax filing or a dispute you need a qualified valuer. All figures stay in your browser and nothing is uploaded.
What is the Business Valuation Calculator?
No single method values a business correctly, so this calculator runs three side by side. The multiple method applies an industry multiple to your SDE or EBITDA.
- Three valuation methods computed side by side from one screen
- Year-by-year DCF table showing cash flow, discount factor and present value
- Gordon growth terminal value with the discount-rate-above-growth check enforced
- Terminal value shown as a share of the DCF answer, so you can see how much rests on it
- SDE and EBITDA earnings bases with an editable industry multiple
- Low, average, high and implied multiple summary — all calculated in your browser
How to use the Business Valuation Calculator
- 1
Pick a currency, choose SDE or EBITDA as your earnings basis, and enter the figure and a multiple.
- 2
For the DCF, enter this year's cash flow, the projection length and an annual growth rate.
- 3
Set a discount rate and a terminal growth rate — the discount rate must be the higher of the two.
- 4
Enter total assets and total liabilities for the asset-based value.
- 5
Compare the low, average and high of the three methods at the bottom.
About the Business Valuation Calculator
No single method values a business correctly, so this calculator runs three side by side. The multiple method applies an industry multiple to your SDE or EBITDA. The discounted cash flow projects your cash flow forward, discounts each year back at your required return and adds a Gordon growth terminal value. The asset method is simply what the balance sheet says is left after liabilities.
The spread between the three is the useful output. A wide gap usually means the business is worth very different amounts to different buyers — a strategic acquirer paying for cash flow, a competitor paying for assets, a lifestyle buyer paying for owner earnings. The tool shows the low, high and average alongside the implied multiple on your earnings.
The discounted cash flow shows its working year by year, including the discount factor and the share of the answer that comes from the terminal value. These are planning estimates rather than a formal valuation, and every figure is calculated in your browser without being uploaded.
Frequently asked questions
How do you value a small business?
Most small businesses change hands on a multiple of seller's discretionary earnings, typically between two and four times, adjusted for how much the business depends on the owner. A discounted cash flow gives a more rigorous answer if you have a credible forecast, and the asset value usually sets a floor.
What is the difference between SDE and EBITDA?
Seller's discretionary earnings adds the owner's salary and personal benefits back to profit, because a new owner would take those out. EBITDA does not. SDE is the convention for owner-operated businesses; EBITDA is used for larger companies with a management team already in place, and it produces a smaller number.
What discount rate should I use in a DCF?
It should reflect the risk of the cash flows. Small private businesses are commonly valued at 15% to 25% because they are illiquid, concentrated and hard to sell, while a large stable company might use 8% to 12%. The rate is the single most sensitive input in the whole model — try a range.
How is terminal value calculated?
The Gordon growth model: take the final projected year's cash flow, grow it by one more year of terminal growth, and divide by the discount rate minus the terminal growth rate. That result is then discounted back to today. The formula breaks down entirely if terminal growth is at or above the discount rate, which is why this tool blocks it.
Why do the three methods give such different answers?
Because they measure different things: future earnings, discounted cash, and the liquidation value of what you own. A profitable service business with almost no assets will value high on earnings and near zero on assets. The gap is information, not an error — it tells you which kind of buyer to look for.
Is this a formal business valuation?
No. This is a planning estimate to help you understand the range and the levers. A sale, a tax filing, a divorce or a dispute all need a qualified valuer who can examine the accounts, the contracts and the market. Treat these numbers as a starting point for that conversation.
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