Business Acquisition Multiple Calculator
Business acquisitions are typically priced as a multiple of earnings, EBITDA (earnings before interest, taxes, depreciation, and amortisation), or revenue. This calculator applies a chosen valuation multiple to your financial figures to estimate enterprise value, then calculates equity value by adjusting for net debt. It also calculates the implied valuation multiple if you already know the asking price. All outputs are indicative estimates; actual valuations require a full due diligence process and professional appraisal.
Business valuation multiple formula
Enterprise Value = Earnings * Multiple
Net Debt = Total Debt - Excess Cash
Equity Value = Enterprise Value - Net Debt
Earnings Yield = (1 / Multiple) * 100
Implied Multiple (if price known) = Price / Earnings
Enterprise value represents the total cost to acquire the business, including taking on its debt. Equity value is what the equity holders (shareholders or owner) receive, after paying off debt with the proceeds. The earnings yield is the inverse of the multiple and shows the return on investment before growth, analogous to a bond yield.
Understanding valuation multiples
- EBITDA multiples are most common in mid-market M&A (businesses with $1M to $50M EBITDA). They allow comparison across businesses with different capital structures.
- SDE multiples are used for owner-operated small businesses where the owner's salary and perquisites are added back to show true earning power for a new owner-operator.
- Revenue multiples are used for high-growth businesses (often SaaS or technology) where profitability is low or negative but recurring revenue is valuable.
- Multiples compress when interest rates rise (as alternative investments become more attractive) and expand when rates fall.
- Strategic buyers often pay higher multiples than financial buyers because they can realise synergies.
Business acquisition multiple calculator: frequently asked questions
What is an EBITDA multiple?
An EBITDA multiple is the ratio of a business's enterprise value (acquisition price) to its earnings before interest, taxes, depreciation, and amortisation (EBITDA). For example, if a business sells for $5,000,000 and has EBITDA of $1,000,000, the EBITDA multiple is 5x. Multiples vary by industry, growth rate, and market conditions.
What is SDE and when is it used?
Seller's Discretionary Earnings (SDE) is a measure of owner earnings commonly used to value small businesses (typically under $5,000,000 in revenue). SDE adds back the owner's salary, non-cash charges, non-recurring expenses, and personal expenses to net income. SDE multiples for small businesses typically range from 2x to 4x.
What EBITDA multiple is typical for a business acquisition?
EBITDA multiples vary widely by industry and size. Small businesses (under $1M EBITDA) typically sell for 3x to 5x EBITDA. Mid-market companies ($1M to $10M EBITDA) might sell for 5x to 8x. Larger companies or those in high-growth sectors can command multiples of 10x or higher. These figures change with market conditions and interest rates.
What is enterprise value vs equity value?
Enterprise value (EV) is the total value of a business including debt (what a buyer pays for the whole business). Equity value is EV minus net debt (what the equity holders receive). When multiples are quoted in M&A, they typically refer to enterprise value. To get equity value, subtract any debt assumed and add any excess cash.
What factors affect a business's acquisition multiple?
Key factors include: industry (technology commands higher multiples than manufacturing), size (larger businesses typically get higher multiples), growth rate (fast-growing businesses command premiums), customer concentration (businesses relying on one or two customers trade at discounts), recurring revenue, management depth, and overall market conditions including interest rates.
Official sources
- U.S. Small Business Administration, Buying a Business: SBA Buying a Business Guide.
- IRS, Business Valuation Guidelines (Revenue Ruling 59-60): IRS Revenue Ruling 59-60.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.