Business Succession Planning Calculator

Common methods are: a multiple of EBITDA (typically 3-8x for small businesses, higher for high-growth or recurring revenue), discounted cash flow, asset value plus goodwill, and comparable transactions. Industry-specific rules of thumb (e.g., 1-2x annual revenue for many service businesses) are common starting points.

Through some combination of cash, seller financing (often 5-10 years at 5-8% interest), bank or SBA financing (SBA 7(a) loans up to $5M), buyer earn-outs tied to future performance, life insurance funding for buy-sell agreements, and ESOPs for employee buyouts. Pure cash sales are the exception, not the rule.

A buy-sell agreement (triggered by death, disability, retirement, divorce, deadlock), an updated operating or shareholder agreement, key-person life and disability insurance, a written succession or transition plan, and updated estate documents that align with the business plan.

At least 5-10 years before any anticipated transition. Early planning enables tax-efficient gifting, training of successors, sale-leaseback structuring, and locking in valuation discounts. Owners who plan late typically receive 20-40% less than those who plan early.