In Short
A quick way to estimate what a business is worth is EBITDA × an industry multiple. NYU Stern's January 2026 data puts the average US public-company EV/EBITDA at 14.26× for business and consumer services and 17.18× for engineering and construction [1]. Small private firms usually sell for less, so this tool takes 30% off by default: a services business with $400,000 of EBITDA comes out at about $3.6M to $4.4M. It's a rough estimate, not an appraisal.
How to Use the Business Valuation Calculator
- Search your type of business (“restaurant”, “plumber”, “CPA firm”) and pick the closest industry. The tool fills in its average EV/EBITDA multiple.
- Enter your annual EBITDA, or turn on Help Me Calculate EBITDA to build it from net income, interest, taxes, depreciation and amortization, plus owner add-backs.
- Check the small-business discount (30% to start) and, if you have a better figure, type your own multiple.
- Add business debt and spare cash to see the equity value: what the owners would keep.
- Or tap Say It All: “I run a plumbing company with EBITDA of 450 thousand, 120 thousand in debt and 60 thousand in cash.”
The Formula
The market approach compares a business with similar companies [2]. Here the comparison is the average enterprise value to EBITDA of US public companies in your industry [1], cut by a discount for being small and private. The range uses one turn of the multiple below and above.
- EBITDA = net income + interest + taxes + depreciation + amortization
- Adjusted EBITDA = EBITDA + owner pay above a market salary + one-time costs
- Adjusted multiple = industry EV/EBITDA × (1 − small-business discount)
- Enterprise value = adjusted EBITDA × adjusted multiple (low = multiple − 1, high = multiple + 1)
- Equity value = enterprise value − debt + cash
Worked Examples
| Scenario | Inputs | Result |
|---|---|---|
| Plumbing company | Engineering/Construction 17.18×, EBITDA $450,000, 30% discount, $120,000 debt, $60,000 cash | Adjusted multiple 12.03× · enterprise value $4.96M to $5.86M (mid $5.41M) · equity value about $5.35M |
| CPA firm, EBITDA built up | Net income $250,000 + interest $20,000 + depreciation $30,000 + owner add-back $60,000 + one-time $15,000 = $375,000; Business & Consumer Services 14.26×, 30% discount | Enterprise value $3.37M to $4.12M (mid $3.74M) · after $150,000 debt and $50,000 cash, equity about $3.64M |
| Clinic with a bigger discount | Healthcare Support Services 11.17×, EBITDA $600,000, 40% discount, $200,000 debt, $100,000 cash | Adjusted multiple 6.70× · enterprise value $3.42M to $4.62M · equity value about $3.92M |
| Your own multiple | Override 6.0×, 0% discount, EBITDA $300,000, $100,000 debt, $20,000 cash | Enterprise value $1.5M to $2.1M (mid $1.8M) · equity value about $1.72M |
Illustrative examples, not projections. Figures use the tax year shown and the assumptions above.
How Do You Value a Small Business?
The SBA describes three common approaches: an income approach based on the earnings the business is expected to produce, a market approach that compares it with similar businesses that have sold, and an asset approach that subtracts liabilities from the value of the assets [2]. Buyers also look at how much debt the cash flow can support [3].
This calculator is a quick market approach: your earnings times what investors pay for a dollar of earnings in your industry. It gives a starting range for a conversation, not a price.
Where Do the Industry Multiples Come From?
From Professor Aswath Damodaran at NYU Stern School of Business, who publishes enterprise value multiples for US industries every January [1]. This tool uses the January 2026 EV/EBITDA for companies with positive EBITDA, across 91 industries, with the number of firms behind each one.
They are averages for publicly traded companies, which are larger, more diversified and easier to sell than most private firms. That's why the tool applies a small-business discount, and why the IRS's own valuation guidelines ask appraisers to weigh marketability and control separately [4].
What Is the Difference Between EBITDA and SDE?
EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA adds back costs a new owner wouldn't have: owner pay above what a hired manager would cost, and one-time expenses.
Seller's discretionary earnings (SDE) go further and add back all of one owner's pay and perks. Very small, owner-run businesses are often priced on SDE, with lower multiples to match. This tool uses EBITDA, to line up with the industry multiples.
What Makes a Business Worth More or Less?
The IRS lists the factors appraisers weigh: the nature and history of the business, the outlook for its industry, its financial condition, its earning capacity, goodwill and other intangibles, and the prices of similar companies [4]. The SBA adds intangibles such as brand, customer information and projected revenue [2].
In practice, recurring revenue, a spread-out customer base, a business that runs without the owner, steady growth and clean, reviewed books push value up. One dominant customer, an owner who holds every relationship, swinging earnings and thin records push it down. A Zentavos CFO Subscription works through these with your real numbers.
Frequently Asked Questions
How much is my business worth?
A quick estimate is EBITDA × your industry's multiple, less a small-business discount. With $400,000 of EBITDA, the January 2026 Business & Consumer Services multiple of 14.26× [1] and a 30% discount, that's about $3.6M to $4.4M before debt. A formal valuation looks at much more [2].
How accurate is this business valuation calculator?
It's a rough estimate, not an appraisal. The multiples are public-company averages [1], the discount is an assumption, and it can't see your books, customers or assets. For a detailed, accurate valuation built from your real numbers, the Zentavos CFO Subscription includes one, and a free strategy call is the first step.
What multiple of EBITDA do small businesses sell for?
Usually less than public companies in the same industry, because they're smaller, depend more on the owner and are harder to sell. This tool starts with a 30% discount off the public average [1]; very small, owner-run businesses are often priced on SDE instead, with lower multiples.
What are add-backs in a business valuation?
Expenses a new owner wouldn't have, added back to earnings: owner pay above a market salary, one-time costs like a lawsuit or a move, and personal expenses run through the business. Each one needs to be documented, because buyers check them against the books and tax returns [3].
What's the difference between enterprise value and equity value?
Enterprise value is the whole business before debt. Equity value is what the owners keep: enterprise value minus debt plus spare cash. A $4M business with $150,000 of debt and $50,000 of cash has an equity value of about $3.9M.
Can I download a business valuation spreadsheet?
Yes. The free Business Valuation Worksheet is an Excel file with the EBITDA build-up, add-backs, the full NYU Stern multiples table, the discount and the low, mid and high range, all built from formulas.
Sources
- Enterprise Value Multiples by Sector (US), January 2026 — NYU Stern School of Business (Aswath Damodaran)
- Close or sell your business: determine the value of your business — U.S. Small Business Administration
- Buy an existing business or franchise — U.S. Small Business Administration
- Internal Revenue Manual 4.48.4, Business Valuation Guidelines — Internal Revenue Service
Official sources only: the IRS, SSA, BLS and other government agencies. Read how Zentavos researches.