The owner's workbench
Business Valuation Calculator
Estimate SDE, EBITDA and a low-to-high value range using your own multiples. Educational only, not an appraisal.
Use profit after owner salary, interest and depreciation, but before income tax. Enter each add-back once and only if supported. Multiples below are illustrative example multiples, not market data.
Your numbers
Changing industry does not supply a market multiple. Enter your own researched low and high range. Default: SDE 2.0×–3.0×.
Your results
SDE
$200,000.00
EBITDA
$125,000.00
Low business value
$400,000.00
Mid business value
$500,000.00
High business value
$600,000.00
Rough educational estimate, not an appraisal, offer or expected sale price. Negative earnings do not create a meaningful negative sale price. Debt, cash, assets and transaction terms are not adjusted here.
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Estimates only. Results depend on your inputs.
How this is calculated
EBITDA = profit before income tax + interest + depreciation/amortization
SDE = EBITDA + owner salary + owner perks + eligible one-time expenses
Low value = SDE × low multiple
Mid value = SDE × (low multiple + high multiple) ÷ 2
High value = SDE × high multiple
How to use it
- Enter matching annual profit and expense figures.
- Document eligible add-backs without counting an expense twice.
- Enter your assumed multiples and review the range; it is not an appraisal.
A business value range begins with a defined earnings number
This calculator estimates seller’s discretionary earnings, or SDE, and EBITDA from the numbers you supply. It then multiplies SDE by a low and high multiple that you enter. The midpoint uses the arithmetic average of those two multiples.
The result is a rough educational estimate, not an appraisal, offer, financing decision or promised sale price.
Use annual figures from the same period. Revenue is context, not a direct valuation multiplier in this tool. Enter net profit after owner salary, interest and depreciation, but before business income tax.
If your statement starts with after-tax profit, first reconcile it to before-tax profit. Without that adjustment, the number labeled EBITDA would be incomplete.
Separate reported EBITDA from discretionary add-backs
EBITDA here equals before-tax net profit plus interest and depreciation or amortization. SDE adds one working owner’s salary, owner perks and eligible one-time expenses to that amount. The tool does not independently verify eligibility.
It also does not turn a cash withdrawal, dividend or owner draw into an expense that can be added back.
Examples use made-up numbers. Education only, not tax, legal or investment advice.
The setup
Suppose the business has $1,000,000 of annual revenue and $100,000 of before-tax net profit.
Owner salary already deducted is $60,000; separately recorded owner perks are $10,000; one-time expenses are $5,000; interest is $10,000; and depreciation is $15,000.
EBITDA is $125,000.
SDE is $200,000.
What it tells you
Each expense enters once.
Adding the same perk through salary and again through the perks field would overstate earnings.
Example multiples are not industry market data
The setup
The default 2.0× to 3.0× SDE range is labeled illustrative example multiples, not market data.
Applied to the $200,000 example SDE, it gives a $400,000 low estimate, $500,000 midpoint and $600,000 high estimate.
Selecting an industry does not silently change the range or suggest that these are observed transaction multiples.
If you have a researched range, confirm that it applies to the same earnings definition and a comparable business.
Do not apply an EBITDA multiple to SDE.
A business needing a replacement manager has a different ongoing cost structure from one where the buyer personally performs the owner’s work.
Revenue alone does not settle that question.
Review what the estimate excludes
Debt, surplus cash, working-capital adjustments, real estate, asset condition, capital spending, customer concentration and transaction terms can materially change a deal. None are automatically added to or deducted from the displayed value. Negative earnings can produce negative arithmetic results; that is not a meaningful negative sale price or a conclusion about recoverable asset value.
Keep a schedule showing the source and explanation for every proposed add-back. Recurring operating expenses do not become one-time expenses simply because an owner would prefer not to pay them. Buyers may reject adjustments, and replacing the owner can consume part of the displayed SDE.
Read the SDE and EBITDA vs SDE lessons. Use this calculation to prepare questions, not to claim that a business has been valued.
Questions owners ask
Are the default multiples market benchmarks?
No. 2.0×–3.0× SDE is an illustrative example range. Supply your own researched assumptions.
Is this an appraisal?
No. It is a rough educational estimate and does not verify earnings, assets or transaction terms.
Do I add an owner draw back?
Not if it was not a profit-and-loss expense. Adding a balance-sheet transfer would overstate earnings.
What profit input should I use?
Profit before business income tax, after the entered salary, interest and depreciation expenses.
Does this estimate the cash I take home at closing?
No. Debt, taxes, cash, fees, working capital and deal terms are not adjusted here.
Sources
No external research cited. Calculations and illustrative assumptions are shown above; this is not evidence of a real owner outcome.
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