Business Valuation Calculator — Methodology

Step-by-step calculation

Estimate small business value using revenue multiple, EBITDA multiple, and discounted cash flow side-by-side.

1. 1

   Enter revenue, EBITDA, and free cash flow

   Last 12 months of revenue; EBITDA; and annual free cash flow for the DCF method.

2. 2

   Set the revenue and EBITDA multiples

   Use industry averages shown in helper text — service 2–4× EBITDA, SaaS 3–8× revenue, retail 0.5–1.5× revenue.

3. 3

   Set discount rate and growth rate for DCF

   Discount rate is typically 15–25% for SMEs; growth rate is your expected annual revenue growth.

4. 4

   Read the valuation range

   Three methods produce three values. Use the range and midpoint as your asking-price anchor — buyers expect to negotiate within a range.

Assumptions and overrides

DCF uses 5-year explicit projection + Gordon growth terminal value. The terminal value typically accounts for 60–80% of total DCF — small changes to growth or discount rate produce large swings. Use the range across methods, not the DCF alone.

Every region default on the calculator is editable. If your effective rate, fee, or threshold differs from the headline figure shown, type your own number into the field — the calculator recomputes instantly without leaving this page.

Review cadence and corrections

This methodology and the underlying rate defaults are reviewed at least annually, and immediately following any change to the headline rate from IRS, HMRC, or SARS. Every substantive update is recorded on the public changelog. Spotted an error? See the corrections policy for how to report it.

See the full editorial policy for the standards every page on BusCalcTools is held to.