Every business owner asks this eventually, and the honest answer is: it depends on more than most online calculators let on. But the mechanics of how buyers actually get to a number are real and learnable.
The basic mechanic
Enterprise Value = Normalised EBITDA × Multiple. From there, Indicative Equity Value = Enterprise Value − Debt + Cash — roughly what you'd walk away with before tax and deal costs.
Why the multiple varies so much
Small business multiples commonly range from around 2x to 4x EBITDA, but that range moves materially based on industry, size, growth rate, customer concentration, and how much the business depends on the owner personally. Some sectors trade well below 2x; others, well above 4x. A multiple pulled from a generic online source is a starting point for a conversation, never an answer.
What actually moves your multiple, in either direction
Buyers pay up for recurring revenue, low customer concentration, real management depth beyond the owner, and clean, reviewed financial records. They discount hard for the opposite — a business that stops working the day the owner stops showing up is worth structurally less than one that doesn't, regardless of its current profitability.
Why a range matters more than a single number
Because the multiple is genuinely uncertain until you're in a real process with a real buyer, modelling a range — low, base, high — and seeing how sensitive your value is to the multiple, tells you far more than anchoring on one figure ever will.
The Business Sale Readiness & Valuation Toolkit models exactly this: three real scenarios plus a full sensitivity table from 1.5x to 5.0x, computed from your own numbers.
Top comments (0)