Business Valuation Calculator
Value the business on an EBITDA multiple, cross-check it against a discounted cash flow, and bridge from enterprise value to what the owners would actually receive.
Business Valuation Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- The multiple is negotiated, not calculated, and the range is wider than any formula suggests.
- A perpetuity DCF is extremely sensitive to the discount and growth assumptions.
- Ignores deal structure — earn-outs, escrow and working-capital adjustments all move actual proceeds.
In short: EBITDA of $468,000 at a 6.5× multiple is an enterprise value of $3,042,000. After deducting $1,900,000 of debt and adding $180,000 of cash, the equity value is $1,322,000 — the bridge consumes 56.54% of the headline figure.
Formula
Enterprise value is what the whole business is worth; equity value is what the owners receive. Confusing the two is the most expensive mistake in a negotiation.
Worked Example
- Apply the multiple. $468,000 of EBITDA at 6.5× is an enterprise value of $3,042,000. The multiple reflects sector, size, growth and the durability of earnings.
- Bridge to equity. Deduct $1,900,000 of debt and add $180,000 of cash. Equity value is $1,322,000 — the bridge removes 56.54% of the headline.
- Test the range. At 5.5× to 7.6× the enterprise value spans $2,574,000 to $3,556,800 — a $982,800 spread on identical earnings.
- Cross-check with cash. $12,300 of free cash flow growing at 3% and discounted at 11% gives a very different answer, which is itself the finding.
- Value an improvement. A 10% EBITDA gain adds $304,200 of enterprise value at 6.5×. Every dollar of sustainable earnings is worth $6.50 at exit.
The gap between the multiple and the cash flow cross-check is the most important output on this page. A 6.5× multiple values the business at $3,042,000 on $468,000 of EBITDA, but the free cash flow it actually produced was $12,300 — because capex of $140,000 exceeded depreciation and $117,500 was absorbed by working capital. A buyer running a cash flow analysis will see that immediately and argue the multiple down, and they will be right to: EBITDA that never converts to cash is not worth the same as EBITDA that does. This is precisely why the cash conversion work in batch 33 matters at exit as well as in operations — shortening the cycle raises free cash flow, and free cash flow is what survives diligence.
Strengths & Limits Of This Model
Where this engine is strong
- Bridges enterprise value to equity value, which most calculators omit entirely.
- Cross-checks the multiple against free cash flow and explains any divergence.
- Prices both a half turn of multiple and a 10% earnings improvement.
Where it stops
- Cannot assess the qualitative factors that set the multiple in the first place.
- A single-period EBITDA ignores trend, which buyers weigh heavily.
Practical Use Cases
Setting an asking price before going to market
Anchor on the multiple range, but be ready to defend it with cash conversion. Buyers discount earnings that do not become cash.
Understanding what you would actually receive
Enterprise value is not proceeds. Here the debt bridge takes $3,042,000 down to $1,322,000 before any fees or escrow.
Deciding whether to deleverage before selling
Debt repaid from cash flow converts directly into equity value. Test capacity with the Debt Service Coverage Ratio Calculator.
Prioritising operational work by exit value
A dollar of sustainable EBITDA is worth the multiple at exit. Find the margin levers with the EBITDA Margin Calculator.
Methodology & Editorial Standards
The engine values the business on an EBITDA multiple, the dominant method for private companies, and cross-checks it against a perpetuity discounted cash flow. Enterprise value is EBITDA multiplied by the chosen multiple, and equity value is derived by deducting interest-bearing debt and adding cash — a bridge that most simple calculators omit entirely and that frequently accounts for the majority of the headline figure, as it does here at 56.54%. The multiple itself is negotiated rather than calculated: it reflects sector, scale, growth rate, customer concentration, management depth and above all the durability of earnings, and the engine reports the range rather than a single point because the spread between a lower and upper multiple on identical earnings usually exceeds anything operational improvement can deliver in a year. The discounted cash flow cross-check exists to expose a specific failure: EBITDA that does not convert into free cash flow, because capex exceeds depreciation or working capital absorbs the earnings. Where the two methods diverge materially the engine says which direction the divergence runs and what it usually indicates, since a buyer conducting diligence will find that gap and price it. Small owner-operated businesses are frequently valued on seller's discretionary earnings at lower multiples instead. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Business Valuation Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
How is a business valued?
Most private businesses are valued on a multiple of EBITDA. Here $468,000 at 6.5× is an enterprise value of $3,042,000.
What is the difference between enterprise and equity value?
Enterprise value is the whole business; equity value deducts debt and adds cash. Here that bridge takes $3,042,000 down to $1,322,000.
Why does the bridge matter so much?
It consumes 56.54% of the headline figure here. A seller quoting enterprise value and a buyer thinking about equity are discussing very different numbers.
What multiple should I use?
It depends on sector, size, growth and earnings durability. The engine shows a 5.5× to 7.6× range, worth $982,800 of spread on identical earnings.
Why cross-check with discounted cash flow?
To expose EBITDA that never becomes cash. If capex and working capital absorb the earnings, a buyer will find it and discount the multiple.
What is SDE and when is it used?
Seller's discretionary earnings adds back owner compensation and is used for small owner-operated businesses, typically at lower multiples than EBITDA.
Does paying down debt increase what I receive?
Directly. Every dollar of debt repaid converts into a dollar of equity value at the same enterprise value.
How much is a 10% EBITDA improvement worth?
$304,200 here — $46,800 of extra earnings multiplied by 6.5. Every dollar of sustainable earnings is worth the multiple at exit.
Can equity value be negative?
Yes, if debt exceeds enterprise value. The business still has value but the owners would receive nothing, and lender consent would be required.
Why do buyers adjust EBITDA?
To normalise for owner perks, one-off items and above or below-market rent. Aggressive add-backs are the most common source of dispute.
Is a revenue multiple ever appropriate?
For loss-making or high-growth businesses where earnings are not yet meaningful. The implied revenue multiple here is 1.268× as a sanity check.
What lowers a valuation multiple most?
Customer concentration, owner dependence, declining revenue and earnings that do not convert to cash. Each is diligenced specifically.
How does working capital affect a deal?
Most deals require a normalised working-capital level at completion. Releasing cash before a sale can reduce proceeds if the target is set on historic levels.
Should I value on last year or a forecast?
Buyers pay for sustainable current earnings. Forecast growth is credited only where there is evidence, and rarely in full.
What is a fair multiple for a small business?
Often 3× to 5× SDE for very small owner-operated businesses, rising with size, systems and management depth.
Why is my valuation lower than similar public companies?
Private companies trade at a discount for illiquidity, scale and concentration risk. Public comparables are a starting reference, not a target.
Is this business valuation calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.