Question the assumptions
Business valuation calculator
Estimate a range and see the business levers that change it.
See the assumptions
A range to question, not a price to promise.
All results, adjustments, and lever comparisons are free. Owner-cover scenarios subtract the replacement cost you enter; other improvement costs remain excluded.
Not financial advice. Not equity value or take-home proceeds.
Illustrative range: $392,000 to $588,000. Middle: $490,000.
- Low scenario
- $392,0001.96x SDE
- Middle scenario
- $490,0002.45x SDE
- High scenario
- $588,0002.94x SDE
Low and high apply −20% / +20% to the adjusted middle. They are not observed market bounds or confidence intervals. No growth is applied to annual earnings. Displayed dollars and multiples are rounded; calculations retain precision.
Download your valuation levers report.
Signup unlocks the PDF in this browser and subscribes you to Nerd Out notes. Your report contains the base range, cost-adjusted owner-cover scenario, teaching-only comparison, and three largest modeled levers. Your financial inputs and personalized report are never uploaded, saved, or emailed.
levers report (.pdf)
Preview the download and see what is included
- Your range and assumptions
- Three improvement levers
- Owner worksheet
$392,000 to $588,000. Illustrative base range; the report also records your selected owner cover and replacement cost. Not a formal appraisal.
See earnings multiple adjustments
See every adjustment
Reference: 2.80x, Full year 2025 SDE average. The four adjustments below are Nerd Out assumptions, not measured premiums.
| Assumption | Change |
|---|---|
| Growth+0.01x per percentage point; growth capped at -20% / +20%. | +0.05x |
| Owner dependencyLow: 0x; medium: -0.25x; high: -0.50x. | -0.50x |
| Customer concentration-0.01x per point above 20% largest-customer share; capped at -0.60x. | -0.10x |
| Recurring revenue+0.005x per percentage point; capped at +0.50x. | +0.20x |
| Floor adjustmentKeep middle at or above 0.10 times | +0.00x |
$200,000 × 2.45x ≈ $490,000 middle scenario (rounded display).
What if the business needed you less?
The fictional example tests two levels of cover with $0 incremental replacement cost. Enter the cost for your business before relying on the comparison; select zero levels to test no change.
Enter the total incremental annual cost for the selected cover level, not cost per step. Applied only when dependency improves. Do not double-count management pay already in earnings.
At low dependency: earnings $200,000 minus $0 replacement cost = $200,000.
Low $472,000; middle $590,000; high $708,000. Middle change: $100,000.
Teaching-only, earnings held constant: $590,000 middle. This comparison ignores replacement pay.
The base range stays unchanged. The selected cover level, revised earnings, comparison, and cost appear in your report; the optional private PNG uses the cost-adjusted scenario.
Which lever moves the middle most?
Compare five one-at-a-time tests. Sizes differ, so ranking reflects these chosen tests, not statistical importance, certainty, or ROI. Ties are equal; gains cannot be added.
| Lever | Middle change (USD) |
|---|---|
| Owner cover | 100000 |
| Earnings | 49000 |
| Diversify | 20000 |
| Recurring | 20000 |
| Growth | 10000 |
- high to low dependency; $0 annual replacement cost: +$100,000
Name a backup for sales, delivery, approvals, and key relationships. Test a two-week absence; account for the cost of replacement management in earnings.
- $200,000 to $220,000 annual earnings: +$49,000
Review pricing, delivery cost, and normalized profit with your accountant. Do not manufacture add-backs or ignore replacement labor.
- 30% to 20% largest-customer share: +$20,000
Check revenue by customer and contract transfer terms. Diversify without assuming the existing customer disappears or new sales are free.
- 40% to 60% recurring share: +$20,000
Test a useful renewal or service agreement. Verify retention, margins, cancellation rights, and transferability before counting it as recurring.
- 5% to 10% revenue growth: +$10,000
Verify growth in the books and its costs. Above 20% this illustrative adjustment stops increasing; no extra earnings are assumed here.
Full report text and copy fallback
Scenario range (USD)
Low $392,000 at 1.96x | Middle $490,000 at 2.45x | High $588,000 at 2.94x. Illustrative, not a market range. Displayed dollars and multiples are rounded; calculations retain precision.
HVAC businesses. SDE: $200,000; revenue growth 5%; owner dependency high; largest customer 30%; recurring share 40%.
Every multiple adjustment
Reference: 2.80x (Full year 2025 reported SDE average).
Growth: +0.05x. +0.01x per percentage point; growth capped at -20% / +20%.
Owner dependency: -0.50x. Low: 0x; medium: -0.25x; high: -0.50x.
Customer concentration: -0.10x. -0.01x per point above 20% largest-customer share; capped at -0.60x.
Recurring revenue: +0.20x. +0.005x per percentage point; capped at +0.50x.
Floor adjustment: +0.00x. Middle = annual earnings x max(0.10, reference + adjustments). Low = middle x 0.8; high = middle x 1.2.
Three levers to investigate
Ranked by modeled dollar change, not feasibility or ROI. Owner cover uses the selected level and replacement cost; other tests hold earnings constant. Other improvement costs and interactions are excluded. Do not add these changes; zero means no improvement in this model.
1. high to low dependency; $0 annual replacement cost: +$100,000 to a middle of $590,000. Name a backup for sales, delivery, approvals, and key relationships. Test a two-week absence; account for the cost of replacement management in earnings.
2. $200,000 to $220,000 annual earnings: +$49,000 to a middle of $539,000. Review pricing, delivery cost, and normalized profit with your accountant. Do not manufacture add-backs or ignore replacement labor.
3. 30% to 20% largest-customer share: +$20,000 to a middle of $510,000. Check revenue by customer and contract transfer terms. Diversify without assuming the existing customer disappears or new sales are free.
Selected owner-cover scenario
Owner-cover improvement: 2 levels; high to low dependency. Annual replacement-management cost entered: $0; applied: $0. Cost applies only when dependency is reduced, at the selected cover level, not per slider step. Do not double-count pay already included in normalized earnings.
Revised earnings = $200,000 minus $0 = $200,000. Low $472,000; middle $590,000; high $708,000. Middle change from base: $100,000.
Teaching-only comparison, earnings held constant: low $472,000; middle $590,000; high $708,000. This comparison ignores replacement pay.
Owner-dependency worksheet
Complete locally. Use role labels, never passwords or customer names. An assigned backup is not proof of tested cover.
Sales and key relationships: backup role and evidence they can take over ________________________________________________________________________ ________________________________________________________________________
Delivery and quality: backup role and procedure location ________________________________________________________________________ ________________________________________________________________________
Money and approvals: backup role, approved limit, and fallback ________________________________________________________________________ ________________________________________________________________________
Systems and exceptions: backup role, tested access, and escalation ________________________________________________________________________ ________________________________________________________________________
Two-week absence rehearsal: date, gaps found, and next action ________________________________________________________________________ ________________________________________________________________________
Replacement labor cost per year (selected): $0. Revised normalized earnings: $200,000. Reviewer and next review date ________________________________________________________________________
Assumptions and limitations
The base is a historical average or your supplied reference, not a comparable-deal valuation. Every growth, owner, concentration, and recurring-revenue adjustment is an uncalibrated Nerd Out teaching assumption. Their reference point is 0% growth, low owner dependency, at most 20% concentration, and 0% recurring revenue, not the measured profile of the source sample. These factors may already be reflected in a market multiple. Do not treat adding them as statistically valid or apply them twice to an already-adjusted quote. Low/high are 80%/120% of the adjusted middle, not observed percentiles or a confidence interval. The 0.10x middle floor is only a modeling guardrail.
Educational sensitivity model, not financial, tax, legal, or investment advice and not an appraisal, offer, or sale-price prediction. No debt/cash bridge, working-capital adjustment, taxes, fees, real estate, asset appraisal, deal structure, financing, or buyer synergies are modeled. Improvement costs are excluded except for the replacement-management cost entered in the owner-cover scenario. The output is not equity value or take-home proceeds. Zero or negative earnings require other methods. Get a qualified valuation for a transaction, tax filing, financing, litigation, or succession decision.
Source ledger and privacy
business-valuation-v1; dataset bizbuysell-2025-v1; generated 2026-11-01 (UTC). Source reviewed 2026-08-31; review due 2026-11-30. Historical full-year 2025 data, not live prices.
BizBuySell, closed transactions by sector, Average sale price / reported annual cash flow (SDE), not EBITDA. https://www.bizbuysell.com/insight-report-data-tables/
Method context: https://www.bizbuysell.com/learning-center/guide/value-business/. Broker-reported transactions on one marketplace; not the whole market. No source supports our numerical adjustments or scenario width.
Generated in your browser. No financial inputs were saved, uploaded, or included in email capture. Protect this file yourself; deleting it does not require contacting Nerd Out.
Human-reviewed preparation recipe
Act as a document-preparation assistant for a human valuation reviewer. Use only approved financial statements and a documented earnings basis. List missing evidence and disputed add-backs; never invent a multiple, customer, contract, valuation, or guaranteed improvement. Keep source facts separate from hypothetical adjustments.
Draft questions about owner cover, customer concentration, transferable revenue, and replacement labor. Require human approval before changing records or sharing a report. Stop on conflicting periods, mixed SDE/EBITDA, losses, stale sources, or missing authority. Honor opt-out and deletion requests; do not contact customers, buyers, or advisers automatically. Use redacted or fictional records unless an authorized person approves a secure workspace.
Prepare evidence for a human reviewer
Act as a document-preparation assistant for a human valuation reviewer. Use only approved financial statements and a documented earnings basis. List missing evidence and disputed add-backs; never invent a multiple, customer, contract, valuation, or guaranteed improvement. Keep source facts separate from hypothetical adjustments.
Draft questions about owner cover, customer concentration, transferable revenue, and replacement labor. Require human approval before changing records or sharing a report. Stop on conflicting periods, mixed SDE/EBITDA, losses, stale sources, or missing authority. Honor opt-out and deletion requests; do not contact customers, buyers, or advisers automatically. Use redacted or fictional records unless an authorized person approves a secure workspace.
Business valuation formula and limits
Middle scenario = normalized annual earnings × max(0.10, reference multiple + four adjustments). Low = middle × 0.80; high = middle × 1.20.
The base is a historical average or your supplied reference, not a comparable-deal valuation. Every growth, owner, concentration, and recurring-revenue adjustment is an uncalibrated Nerd Out teaching assumption. Their reference point is 0% growth, low owner dependency, at most 20% concentration, and 0% recurring revenue, not the measured profile of the source sample. These factors may already be reflected in a market multiple. Do not treat adding them as statistically valid or apply them twice to an already-adjusted quote. Low/high are 80%/120% of the adjusted middle, not observed percentiles or a confidence interval. The 0.10x middle floor is only a modeling guardrail.
Educational sensitivity model, not financial, tax, legal, or investment advice and not an appraisal, offer, or sale-price prediction. No debt/cash bridge, working-capital adjustment, taxes, fees, real estate, asset appraisal, deal structure, financing, or buyer synergies are modeled. Improvement costs are excluded except for the replacement-management cost entered in the owner-cover scenario. The output is not equity value or take-home proceeds. Zero or negative earnings require other methods. Get a qualified valuation for a transaction, tax filing, financing, litigation, or succession decision.
Historical industry references
BizBuySell: closed transactions by sector, full year 2025. Average sale price / reported annual cash flow (SDE), not EBITDA. Sample counts describe this marketplace, not every business sold.
| Industry | SDE mean | Sales |
|---|---|---|
| Auto repair and service shops | 2.70x | 247 |
| HVAC businesses | 2.80x | 123 |
| Plumbing businesses | 2.62x | 61 |
| Accounting businesses and tax practices | 2.33x | 194 |
| Restaurants | 2.26x | 1774 |
Reviewed 2026-08-31; next review due 2026-11-30. Historical snapshot, not live pricing. Source counts and means do not provide deal-size matching or a valuation distribution. Get comparable transactions and a qualified review, especially outside small owner-operated businesses.
Read the source's valuation-method overview. It does not endorse this model or its adjustments. business-valuation-v1 · bizbuysell-2025-v1.
How this tool works
See how earnings, owner dependency, and revenue quality change an illustrative range before you pay for a professional valuation.
- Enter earnings and five operating inputs
- Inspect the range and test the levers
- Download your private levers report and worksheet
Before a valuation conversation
The useful question is what you would need to verify.
An earnings multiple is only useful when the earnings definition, transaction basis, company size, and comparable businesses match. This calculator exposes its reference multiple and every illustrative adjustment so you can question each one. It cannot establish what a buyer will pay.
Start with normalized trailing earnings reviewed by your accountant. Separate SDE from EBITDA, verify add-backs and replacement management pay, and gather evidence about contract transferability and customer concentration. A specialist must reconcile debt, cash, working capital, assets, taxes, and deal terms before a transaction or formal valuation.
Questions owners ask
Business valuation questions
What is my business worth?
This calculator cannot establish a sale price. It produces an illustrative earnings-multiple scenario and shows what moves it. Your business may be worth materially more or less. Use a qualified valuation professional for sale, financing, tax, litigation, or succession decisions.
What is the business valuation formula?
The middle scenario multiplies normalized annual earnings by the reference multiple plus four explicit teaching adjustments, with a minimum middle multiple of 0.10. Low and high are 80% and 120% of that middle. These are not observed transaction percentiles or a confidence interval.
Can I use EBITDA instead of SDE?
Yes, but you must enter a reference multiple supported for your EBITDA basis and comparable industry. The built-in historical table reports SDE cash-flow multiples and is never applied to EBITDA. Changing basis clears earnings and the custom multiple to prevent accidental reuse.
Are the industry multiples current market prices?
No. The table is a dated snapshot of average cash-flow multiples from selected full-year 2025 BizBuySell closed transactions, with sample counts and source links. It is not a live feed or an appraisal dataset. Built-in references stop working after the stated review deadline until reviewed; your own supported reference remains available.
Are owner dependency and recurring revenue adjustments proven?
No. Their numerical weights, the growth and concentration adjustments, and the scenario width are uncalibrated Nerd Out assumptions. Those factors may already be reflected in an observed multiple. The lever ranking shows the effect of chosen test sizes, not predicted improvements or return on investment.
Does owner cover account for replacement management pay?
Enter the incremental annual cost at the selected cover level. It reduces normalized earnings only when dependency improves; the base range stays unchanged. The PDF records the cost-adjusted range and a teaching-only comparison that holds earnings constant. Do not subtract management pay twice if it is already in your earnings. Zero or negative revised earnings need another valuation method.
What happens if earnings are zero or negative?
The earnings-multiple model declines to calculate. That does not mean the business is worthless. Asset value, a turnaround, intellectual property, and other methods need a qualified review.
Will you email or store my levers report?
No. Signup unlocks a browser-generated PDF with three modeled levers and an owner-dependency worksheet, and subscribes you to Nerd Out notes. Your numbers and report are not uploaded or emailed. Download before leaving; reloading clears your inputs. The share image includes no private values unless you opt in.