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what is your business worth?

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Our business valuation experts are ready to help you value your business and understand the worth of your most important asset. Read on to learn more about the importance of this knowledge, or if you are ready to get started, simply choose the appropriate size business to sign up for your FREE CONFIDENTIAL BUSINESS VALUATION

≤$1   million Annual Sales

$1-5 million Annual Sales

≥$5   million Annual Sales

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When it comes to valuing your business, there are many factors at play. The larger and more complex the company, the more factors there are. Also, consider different buyers place different values on your business for different reasons. There are several methods used to derive a valuation for your company, including fair market value, intrinsic value, fair value, and investment value are the most common. For small business, lower middle-market, and middle-market companies, fair market value is the most common. 

Fair market value

The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both parties having reasonable knowledge of the relevant facts.

Intrinsic value

Typically reserved for larger more complex transactions and publicly traded companies.  This is is a measurement of the present value of future cash flows.

Fair value

Legal standards to value. Often used in divorce and estate planning.

Investment value

Also known as Strategic Value, it is the value to specific buyers. Could exceed fair market value when fulfilling the strategic buyers goals.


Essentially, what a buyer would pay for your company in an open market.

Now, remember, this is a simplification of some very intricate valuation practices. There are valuation experts that specialize in providing very complicated reports as part of their business valuation services. Those reports are often used for IRS inquiries, legal proceedings, intricate financing and other reasons. A full valuation of a company could cost $10,000-$30,000. For small business sales, a valuation is usually not needed, and for the most part our simplified valuation methods are sufficient enough to determine your listing and approximate your eventual sale price.

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Edge Asset Approach


This approach is probably the easiest to understand.  It is simply all of the assets of the business minus the liabilities.  This gives you the adjusted net value of the business and is basically a balance sheet exercise in valuation.  This approach is typically used when the subject company is not producing strong cash flows and the assets are more valuable than the future cash flows.

Edge Market Approach


This is the most commonly used method for small, middle-market, and even publicly traded companies (P/E Ratio is the term used in public markets).  In this approach, you have to establish the company's cash profits by calculating EBITDA, Seller’s Discretionary Earnings, or Owners Benefit depending on the company size and situation.  This number is essentially the profit and benefits the owner of the business receives.  We then multiply this number with a comparable multiple.  We will use this method in our example.

Edge Income Approach


This is more of a complex formula that uses historical performance and future projected cash flows.  The projected future cash flows are then discounted to a net present value.  For small and lower middle market companies, this method is not often used.

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Estimated Market Value

We are going to oversimplify this big time here, but let's take a look at the two major pieces of a small to mid-sized business.  The actual earnings and the market multiplier

First: Establishing Earnings

For small businesses where the owner runs the day-to-day operations of the business and the net income of the business is less than $1 million, the number we are first looking come to understand is SDE (Sellers Discretionary Earnings) or Owners Benefit. 

For mid-sized to larger companies, we are going to need to derive the company's EBITDA or Earnings Before Interest Taxes Depreciation and Amortization.

Simply put, this is how much money the owner is actually making from the business before tax and accounting maneuvers and tangible benefits received.

Second: Apply a Market Based Multiple

Once the reliable cash flow is derived, we now need to find a market multiplier to find the range of value.  For example, most small to mid-sized businesses will have a multiple of 1.5 and 6 times.  The multiple is based on comparables from the market and the reliability and predictability of the company's cash flows based on company performance and organization.

Now the Buyers Decide

Once you have an idea of the range of value and list your company for sale, ultimately the buyer will decide the value with actual valid offers.  No one can tell you exactly what your company is worth, not even an appraiser.  The true value at the end of the day is an actual sale price.

Don't get overwhelmed!

a quick summary of BUSINESS VALUE

Your business is worth the following:

1  A multiple of earnings compared to like businesses (seller's discretionary earnings, owners benefit, and rarely gross sales times an industry multiple).

2  A capitalization of the net profit (Not Owners cannot capitalize owners benefit!) 20% to 50% or a simple multiple of owner benefit.

3  If your business makes little or no money,  Asset value will probably be the method used. (Goodwill + Inventory + Equipment +etc.) Either sold as a whole or liquidated over time.  The value you would receive if you sold all of the business's assets and paid off the debts.


This is a very oversimplified explanation and when the time matters, it is recommended to consult an expert.  You will only well your business once.  You don't get a chance to learn from your mistake and do it better next time.

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FREE Confidential Business Valuation?

Now that you have an idea of how businesses are valued, let's take a look at your situation. One of our valuation experts would be happy to help you out with a free, confidential business valuation.  From there we can help you with a proven sales process or we can even assist with info and tips on how to improve upon your company's value and prepare your business for sale.

Just start by choosing your company size:

≤$1 million annual sales

Learn today how much your business is really worth.


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$1-5 million annual sales

Learn today how much your business is really worth.


Business Medium

≥$5 million annual sales

Learn today how much your business is really worth.


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