What is the EBITDA multiple method?
The EBITDA multiple method values a business by multiplying its annual earnings before interest, taxes, depreciation, and amortization by an industry-specific number. A service business earning $150,000 EBITDA at a 3× multiple is worth approximately $450,000.
What multiple should I use for my business?
Typical small business multiples range from 2× to 5× EBITDA. Retail and restaurants often trade at 2–3×. Professional services at 3–4×. Recurring-revenue or tech-enabled businesses at 4–6×. Your specific industry, growth rate, and customer concentration all affect the multiple.
How accurate is this calculator?
This tool gives a ballpark estimate based on the income approach. Actual sale prices depend on many factors: buyer type (strategic vs. financial), deal structure, working capital included, and market timing. For transactions above $250,000, engage a certified business valuator.
Does this include the value of goodwill?
Yes — the EBITDA multiple implicitly captures goodwill, brand value, customer relationships, and intellectual property. Net tangible assets are added separately to reflect hard assets beyond earning power.