Start with the right earnings measure
For many smaller owner-operated businesses, sellers and buyers discuss seller's discretionary earnings (SDE): a measure intended to show the benefit available to one working owner after considering supported adjustments. For businesses with a more independent management team, EBITDA may be more relevant. Neither measure is simply the revenue shown on your tax return.
Document each adjustment to reported earnings. Owner compensation, nonrecurring costs, and personal expenses may require different treatment depending on the business and the buyer. An unsupported add-back can make an estimate look larger without making it more credible.
- Collect several years of financial statements and tax returns plus current results.
- Explain unusual income and expenses with records, not just a note in a spreadsheet.
- Identify the owner's responsibilities that a buyer would need to replace.
Consider market evidence and business risk
A multiple of earnings can be a useful starting framework, but a generic multiple is not a sale price. Industry, business size, earnings consistency, customer concentration, growth, management depth, and financing conditions may all influence what a buyer is willing and able to pay.
Comparable completed transactions can provide context when the businesses and deal terms are genuinely comparable. A listed asking price is not the same as a completed sale. A preliminary range should make its assumptions visible rather than imply unwarranted precision.
A buyer also needs the company's cash flow to cover financing payments, necessary reinvestment, and the work an owner currently performs while still leaving a return for the risk. If that does not add up, a headline earnings multiple may not support the proposed price.
Understand what is included in the deal
Enterprise value, equity value, and cash received at closing are not automatically the same figure. Debt, excess cash, inventory, normal working capital, real estate, and seller financing can affect the final economics. Two offers with the same headline price may have very different risk and proceeds.
If the business owns property, assess it separately from operating earnings unless the valuation method already accounts for it. An accountant and transaction attorney can help you evaluate tax treatment and contractual terms for your specific situation.
Business evaluation vs. business valuation
Owners often search for a "business evaluation" when they want to know what their business could sell for. In that context, the more precise term is business valuation. An operational evaluation may also assess strengths, weaknesses, and readiness to sell, but it does not by itself establish market value.
BizEval provides a free, preliminary valuation range based on the information you enter. It is a starting point for discussion, not a certified appraisal, a fairness opinion, or a promise that a buyer will pay that amount. A qualified professional should review important decisions and the underlying records.
How your preliminary estimate is calculated
BizEval uses the financial and operating information you enter to calculate an automated preliminary range. Most supported industries use Seller’s Discretionary Earnings (SDE); some use revenue-based methods. The calculation applies configured industry benchmarks and adjustments for factors such as earnings trends, customer concentration, and owner involvement.
Selected industries can use comparable-sale records when enough matching records are available. Otherwise, the calculation uses configured industry benchmarks. It is not a live market quote, and not every estimate is based on comparable completed transactions.
A confidence score is an internal indicator based on the supplied information and business characteristics, not a statistical probability that the business will sell within the range. A qualified advisor should review the financial records, proposed adjustments, and deal terms before you make a sale or financing decision.
Common questions
How do I find out what my business is worth?
Start with accurate financial records and a preliminary estimate. Then discuss the earnings adjustments, industry evidence, risk factors, and deal assumptions with an advisor before setting an asking price.
Is a business valuation the same as a business evaluation?
In everyday searches they are often used interchangeably. Valuation specifically estimates value; an evaluation may be a broader review of the company's operations or sale readiness.
Is an instant valuation a formal appraisal?
No. An instant range depends on the information supplied and general benchmarks. A formal appraisal or transaction-specific opinion requires deeper analysis and a qualified professional.