Business Valuation Calculator

Frequently Asked Questions

How is a business valued?

Common methods: revenue/EBITDA multiples (most common), DCF (discounted cash flow), comparable transactions, and asset-based. SaaS typically values at 5-15x ARR. Profitable businesses use 4-8x EBITDA. Fast-growing startups use revenue multiples.

What multiple do SaaS companies sell for?

Public SaaS: 5-15x ARR depending on growth, profitability, and NRR. Private SaaS: 3-10x ARR. Premium pricing requires: 30%+ growth, 110%+ NRR, gross margin >75%, profitable or near-profitable. Without those, expect lower end of range.

When should I use DCF vs multiples?

DCF for stable, predictable cash flows (mature businesses). Multiples for growth-stage or quick benchmarking. DCF requires 5-10 year projections - easy to manipulate inputs. Most M&A uses both as cross-checks. Strategic acquirers may pay above DCF for synergies.

What lowers business valuation?

Customer concentration (>20% revenue from one customer), declining or volatile revenue, owner-dependent operations, weak unit economics, regulatory risk, deferred capital expenditures. Each can knock 20-50% off valuation. Buyers discount uncertainty heavily.

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Estimates only. Not professional business advice.

Business Information Disclaimer: Estimates only. Not professional business advice.

This calculator provides estimates for informational purposes only. Business results vary by industry, market conditions, and execution. Not a substitute for professional business consulting, accounting, or legal advice. Consult qualified professionals before making business decisions.

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How This Calculator Works

Putting one number on a private company is impossible - so this tool runs four independent methods and reports the spread between them, which is the honest way professionals quote a valuation. You enter annual revenue, EBITDA (earnings before interest, taxes, depreciation and amortisation), an expected annual growth rate, total assets and total liabilities, then pick an industry. The calculator looks up that industry's revenue and EBITDA multiple bands, slides each multiple toward the top of its band as your growth rate rises, projects EBITDA forward five years and discounts it back, computes book equity, and finally reports the low, high and average across all methods. The growth slider matters: a SaaS business growing 5% a year is valued near the 4×-revenue floor, while one growing 35%+ pushes toward the 10× ceiling.

Formula / Method

Revenue valuation = revenue × revenue multiple. EBITDA valuation = EBITDA × EBITDA multiple. The growth factor that positions each multiple within its band is min(1, max(0, (growth − 5%) ÷ 30%)), so 5% growth sits at the band floor and 35% at the ceiling. The DCF projects EBITDA forward five years at your growth rate, discounts each year at a 12% WACC, then adds a Gordon-growth terminal value: terminal EBITDA × (1 + 2.5%) ÷ (12% − 2.5%), itself discounted back. Asset-based value = total assets − total liabilities (book equity). EBITDA margin = EBITDA ÷ revenue.

Worked Example

A SaaS company with $5,000,000 revenue, $750,000 EBITDA (a 15% margin) and 15% growth: the growth factor is (15% − 5%) ÷ 30% ≈ 0.33, so the revenue multiple lands near 4 + (10−4)×0.33 ≈ 6.0× and the EBITDA multiple near 12 + (25−12)×0.33 ≈ 16.3×. Revenue method ≈ $30M; EBITDA method ≈ $12.2M; DCF, compounding $750K of EBITDA at 15% and adding a discounted terminal value, lands in the low-to-mid teens of millions. With assets of $1.5M and liabilities of $0.5M, book equity is just $1M - far below the earnings-based methods, which is normal for an asset-light software firm.

Common Mistakes

Treating the average as "the price" - the range is the answer; a $12M–$30M spread tells you the methods disagree and due diligence will decide where you land.

Using owner's-discretionary cash flow as EBITDA without add-backs - small businesses are usually valued on SDE (seller's discretionary earnings), which adds back the owner's salary.

Inflating the growth rate to lift the multiple - buyers discount unsupported hockey-stick projections heavily.

Forgetting that asset-based value is a floor, not a target, for asset-light businesses; it is most relevant for holding companies and capital-heavy manufacturers.

Ignoring net debt - enterprise value from a multiple is not the cash a seller pockets after debt is repaid.

Tips & FAQ

Why four methods? Each captures a different truth: multiples reflect what the market pays, DCF reflects intrinsic future cash, and book equity reflects liquidation value. Convergence is reassuring; wide divergence flags risk. What lifts a multiple within its band? Recurring revenue, retention above 90%, gross margin above the industry median, growth sustained above 20% YoY, no customer over 20% of revenue, and documented systems that survive the founder's exit. Why 12% WACC? It is a reasonable blended cost of capital for a typical SMB; larger, lower-risk firms use 8–10%, riskier early-stage ones 15–25%. Strategic vs financial buyer: a strategic acquirer who gains synergies often pays above these ranges; a financial buyer (private equity) anchors to EBITDA multiples and target returns. Is this an appraisal? No - it is a planning estimate. A binding number requires a credentialed valuation advisor, audited financials and a quality-of-earnings review before any letter of intent.

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