Business Valuation Calculator
Estimate the market value of a business using the EBITDA multiple method, the most common valuation approach for private companies.
How to use this tool
- Enter annual revenue, ebitda (annual), industry ebitda multiple, total debt and cash & equivalents in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your enterprise value (ev) and the full breakdown beneath it.
Formula
Enterprise Value (EV) = EBITDA × Industry Multiple
Equity Value = EV − Total Debt + Cash & Equivalents
EBITDA Margin = (EBITDA / Revenue) × 100%
How it works
The EBITDA multiple method values a business by multiplying its earnings before interest, taxes, depreciation, and amortization (EBITDA) by an industry-specific multiple derived from comparable company transactions. It is the most widely used method for valuing profitable private businesses.
Equity value (the value to shareholders) is calculated by subtracting net debt (total debt minus cash) from the enterprise value. Industry multiples typically range from 3–10x for main-street businesses and can exceed 15x for high-growth technology companies; selecting an appropriate multiple requires market research on comparable transactions.
Worked example
Manufacturing company with $500K EBITDA
- Enterprise Value = EBITDA × Multiple = $500,000 × 5 = $2,500,000
- EBITDA Margin = $500,000 / $2,000,000 = 25%
- Equity Value = $2,500,000 − $100,000 debt + $50,000 cash = $2,450,000
Enterprise value is $2,500,000 and equity value (what shareholders receive) is $2,450,000.
Key terms
- EBITDA
- Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of core operating profitability.
- Enterprise Value (EV)
- The total value of a business, including both equity and debt, before netting out cash.
- Equity Value
- The value attributable to shareholders, equal to enterprise value minus net debt.
- EBITDA Multiple
- A valuation ratio expressing enterprise value as a multiple of EBITDA, derived from comparable market transactions.
- Net Debt
- Total debt minus cash and cash equivalents; represents the net financial obligations of the business.