Free calculator
Asking price sanity check
- Implied SDE multiple
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- Implied EBITDA multiple
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- Tangible assets included
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- Goodwill in the price
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- Goodwill as % of price
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- Price at your multiple
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This reports the multiple your own figures imply. It does not tell you what multiple is right — that depends on revenue trend, customer concentration, owner dependence, lease terms and competitive position, none of which a calculator can see. Anyone quoting you a market multiple without those is guessing.
What a multiple actually tells you
A multiple is not a valuation. It is a ratio — the price divided by the earnings — and its only job is to make two businesses comparable enough to argue about. Quoting one without the earnings basis is meaningless: 3× SDE and 3× EBITDA describe very different prices for the same company.
What this tool will not do is tell you the right multiple, because there is no such number in the abstract. The same business is worth more with a five-year lease than a one-year lease, more with 400 customers than 4, more with a manager in place than with an owner who is the business. Anyone quoting you a market multiple without asking about those things is guessing at your expense.
The goodwill line is the real question
Subtract the tangible assets from the price and what remains is what you are paying for the business as a going concern — the customers, the reputation, the trained staff, the systems, the phone that rings.
A high goodwill proportion is not a problem in itself; most service businesses are almost entirely goodwill and are perfectly good acquisitions. It does tell you where diligence has to concentrate. When 85% of the price is intangible, equipment condition barely matters and customer concentration matters enormously.
It also matters for tax: goodwill sits in Class VII of the purchase price allocation, and the allocation is negotiated, not automatic.
Use your own multiple, and say why
The last field is deliberately yours to set. Pick the multiple you think this specific business justifies, and be able to say why in a sentence — steady recurring revenue, or heavy owner dependence, or a lease that expires in fourteen months. That sentence is your negotiating position, and it is far stronger than a number you read somewhere.
Then check the number is real before you rely on it. The SDE on a listing and the SDE a lender will underwrite are frequently different figures; run it through the SDE calculator first.
Frequently asked questions
What is a normal multiple for a small business?
There is no honest single answer, which is why this tool does not give one. Multiples vary by industry, earnings size, growth, concentration, owner dependence and how clean the books are. Rule-of-thumb references exist and are useful as orientation, but a rule of thumb is not a valuation and should never be the basis of an offer.
Should inventory be included in the asking price?
It depends what the seller means, and you should establish it early. Some listings quote a price plus inventory at cost, some include it. The difference can be tens of thousands, and discovering it late is a bad-faith conversation nobody wanted.
Why is my implied multiple higher than what I have been told is typical?
Usually one of three things: the SDE is overstated by add-backs that will not survive a lender, the price includes real estate or inventory that should be considered separately, or the seller is simply asking too much. This tool separates the second from the other two; the SDE calculator addresses the first.
Does a low multiple mean a good deal?
No. A low multiple often signals a reason — declining revenue, a lease about to expire, one customer that is really the whole business, or a licence that will not transfer. Cheap and good are different findings, and diligence is what tells them apart.
Educational only — not a valuation, a loan pre-approval, or a lender's number. Confirm specific rules, rates, and forms with the relevant New York State agency, attorney, CPA, lender, or insurer before acting. The formulas behind this tool are documented on the methodology page.