What is my business worth?
Valuation is the single most important conversation in any sale. Price too high and the business sits unsold for a year. Price too low and you give away hundreds of thousands of dollars of your own equity.
The two cash flow metrics that matter
- SDE (Seller's Discretionary Earnings). Net income plus owner compensation, owner benefits, interest, depreciation, amortization, and one-time expenses. Used for businesses where one owner-operator is the primary worker.
- EBITDA. Earnings before interest, taxes, depreciation, and amortization. Used for businesses with a real management team and multiple owners.
Industry multiples (rough 2026 ranges)
- HVAC, plumbing, electrical contracting: 2.5x to 4x SDE
- Restaurants and food service: 1.5x to 2.5x SDE
- Professional services (accounting, consulting): 2x to 3.5x SDE
- E-commerce and DTC brands: 2.5x to 4x SDE (varies wildly by platform and margin)
- SaaS and recurring revenue: 3x to 6x ARR or higher
- Distribution and wholesale: 2x to 3.5x SDE
- Manufacturing: 3x to 5x EBITDA
What raises your multiple
- Recurring or contract-based revenue.
- Customer base where no single customer is over 10 to 15 percent of revenue.
- Owner who works in the business under 20 hours a week.
- 3 years of growing revenue and profit.
- Documented systems, trained team, transferable processes.
- Long-term lease that transfers without major hurdles.
What lowers your multiple
- Owner is the business: every relationship, every key skill, every customer call.
- One customer over 25 percent of revenue.
- Cash-heavy operations where revenue does not match tax returns.
- Declining or flat revenue trend.
- Aging equipment requiring near-term capital investment.
- Short lease, personal guarantees, or non-transferable franchise.
What to do before you ask for a valuation
Pull 3 years of tax returns and matched internal financials. Make a list of every expense that runs through the business but is personal or one-time. Identify your top 10 customers by revenue. That is what any honest valuation conversation starts with.
BizBuzz Brokers provides free, confidential valuation conversations for owners who are thinking about selling in the next 6 to 36 months.
Frequently asked questions
What is Seller's Discretionary Earnings (SDE)?+
SDE is the total financial benefit a single owner-operator receives from a business: net income, plus owner salary and benefits, plus interest, depreciation, amortization, plus one-time and non-business expenses. It is the standard cash flow metric for businesses with under about $1M in profit.
When do buyers use EBITDA instead of SDE?+
EBITDA is typical once a business has multiple owners or a real management team in place, usually above $1M to $2M in profit. It assumes the buyer will pay a market-rate manager rather than work in the business themselves.
What multiple should I expect for my business?+
It depends on industry, size, growth, recurring revenue, and customer concentration. Service businesses: 2x to 3.5x SDE. Distribution and contracting: 2x to 4x. Recurring-revenue or software-adjacent: 3x to 6x SDE. Hard-asset businesses below tangible asset value: usually 1x to 2x.
Will an appraiser or broker valuation be different?+
Often yes. Certified appraisers produce defensible reports for legal, tax, or estate purposes. Broker opinions of value focus on what buyers will actually pay in today's market. For a sale, the broker number matters more.
Why is my business worth less than I think?+
Common reasons: customer concentration, owner dependence, no documented systems, declining revenue trend, lease that does not transfer, equipment near end-of-life, or financials that do not match the tax return.
Get a free valuation conversation.
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