Business Valuation Calculator

How to Calculate What My Business is Worth

Understanding your business's estimated value is essential for informed decision-making - whether you're planning for growth, considering funding options, or exploring future transitions. While this calculator provides a starting point for basic valuation estimates, complex business valuations often benefit from professional financial guidance. Use this tool to explore common valuation methods and discover financial advisors who specialize in business valuation.
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IntroductionValuation CalculatorMethods of ValuationWhich Valuation Method?Factors of Business ValueNext Steps

Introduction

Understanding your business's value isn't just for selling – it's essential for making informed decisions about growth, investment, and long-term planning. While there are many complex methods for calculating business value, we'll break down the most practical approaches and show you how to use them effectively.

In addition to the calculator, we put together a guide to explore the most common business valuation methods, explain how to calculate them step-by-step, and help you understand which approach makes the most sense for your situation.
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Business Valuation Calculator

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This business valuation calculator is provided for educational and informational purposes only. The results are based on the information you provide and general valuation formulas, which may not reflect your business's specific circumstances. While this tool can provide rough estimates, the results should not be relied upon for business decisions and do not constitute a formal business valuation.

Many factors affecting business value—including local market conditions, economic factors, and industry-specific considerations—are not captured by these basic calculation methods. Historical results do not guarantee future performance, and actual business value may vary significantly from these estimates.

By using this calculator, you acknowledge that AdvisorFinder does not provide investment, legal, tax, or valuation advice, makes no representations about the accuracy of calculator results, and is not responsible for decisions made using these estimates. For formal valuations, we recommend consulting qualified professionals. You can explore financial advisors who specialize in business planning and valuation services through our platform.

What are the main methods of business valuation?

Different businesses may benefit from different valuation approaches. Here are several widely-used methods to consider:

1. Asset-Based Approach

This method examines what your business owns versus what it owes.

Basic Formula: Business Value = Total Assets - Total Liabilities

Best suited for:

  • Companies with substantial physical assets
  • Real estate holdings
  • Manufacturing operations

Consider that: This approach may not fully capture the value of intangible assets like customer relationships or intellectual property.
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2. Income-Based Approach

This method focuses on your business's income generation potential.

Basic Formula: Present Value = Annual Income / Required Rate of Return

Best suited for:

  • Service-based businesses
  • Companies with predictable cash flow
  • Professional practices

Consider that: Future income projections involve various assumptions and market factors.
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3. Market-Based Approach

This method considers recent sales of similar businesses in your industry.

Service Business Formula: Value = (EBITDA × 1.5) - (Current Liabilities × 0.5)

Retail Business Formula: Value = (EBITDA × 1.3) / (Revenue - Cost of Goods Sold)

Best suited for:

  • Businesses in industries with frequent transactions
  • Companies with comparable peers
  • Established markets

Consider that: Finding truly comparable sales data can be challenging.

Need help understanding market comparables and your valuation?
Find financial advisors with business valuation expertise.
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4. EBITDA Multiple Method

This approach focuses on operational performance.

Basic Formula: Business Value = EBITDA × Industry Multiple

EBITDA can be calculated as:

  • Operating Profit + Depreciation + Amortization OR
  • Net Income + Interest + Taxes + Depreciation + Amortization

📈 Here's a link to Investopedia's full guide on adjusted EBITDA

Consider that: Industry multiples vary significantly and change over time.
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Find Financial Advisors who work with Business Owners

While this guide may provide useful context, nothing can replace the impact of professional financial guidance from an advisor who specializes in working with business owners. A financial advisor who specializes in business ownership can offer experience and insights for:

  • Interpreting valuation results
  • Understanding industry-specific factors
  • Planning for business transitions (Succession Planning)
  • Developing growth strategies

Use AdvisorFinder to find financial advisors who specialize in working with business owners

👉 Personalized Quiz: Find a Financial Advisor based on your needs

💼 or, Browse all Financial Advisors who work with Businesss Owners

How do you choose a valuation method?

The best valuation method depends on several factors specific to your business:

1. Industry Type

  • Asset-heavy businesses (manufacturing, real estate): Asset-based or book value methods
  • Service businesses (consulting, professional services): Income-based or EBITDA methods
  • Retail businesses: Market-based or revenue multiple methods

2. Business Stage

  • Startups: Future-focused methods like discounted cash flow
  • Established businesses: Current performance methods like EBITDA multiples
  • Declining businesses: Asset-based or liquidation value methods

3. Purpose of Valuation

  • Sale preparation: Multiple methods for negotiation support
  • Internal planning: Simpler methods for quick assessment
  • Investment decisions: Detailed methods like discounted cash flow

What factors affect business value?

Understanding these key factors helps you improve your business's value over time.

Financial Performance

  • Revenue trends
  • Profit margin stability
  • Cash flow patterns
  • Working capital management

Market Position

  • Industry growth outlook
  • Competitive landscape
  • Market share trends
  • Brand strength

Operational Strength

  • Management structure
  • Business processes
  • Customer diversification
  • Revenue predictability

Next Steps for Business Owners

Gather Key Information

  • Financial statements
  • Asset records
  • Market research
  • Industry benchmarks

Consider Multiple Approaches

  • Different methods may yield different insights
  • Consider which methods best fit your business model
  • Document assumptions and methodologies

Plan for Professional Guidance

  • Complex valuations often benefit from professional expertise
  • Financial advisors can help interpret results
  • Professional valuations may be needed for certain transactions

👉 20 Questions to Ask a Financial Advisor About Business Planning

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