Business valuation calculator: What a company is actually worth

There is no single correct value for a business. There are methods, each built on different assumptions, and each producing a different number. This calculator runs all four of the standard ones at once, so instead of a single figure you get a range and some idea of why the ends of it are so far apart.

Fill in whichever methods you have data for. The multiples and asset methods need two inputs each and are visible by default. Market capitalisation and discounted cash flow sit behind the toggles below them.

A valuation is an estimate of what someone should be willing to pay for a business today, given what it owns and what it is expected to produce.

That word "estimate" carries the whole weight. Unlike revenue or profit, value is not a fact recorded anywhere. It is an opinion, arrived at by method, and the methods disagree with each other by design. A profitable services firm with no assets and a struggling manufacturer with a full factory will rank in opposite orders depending on which lens you apply.

The number only becomes a fact at the moment of a transaction, and even then it is a fact about one buyer on one day.

The multiples method is the one most transactions actually use, because it is fast, defensible, and grounded in what similar businesses have recently sold for. Asset-based valuation acts as a floor: no rational owner sells for less than the liquidation value of what they own. Discounted cash flow is the most theoretically sound and the easiest to manipulate, which is why buyers use it to check a multiple rather than to replace one.

Multiples. A marketing agency generates $150,000 of EBITDA and comparable agencies trade at around 8 times.

Value = $150,000 × 8 = $1,200,000

Everything in that calculation is the multiple. Change it to 6 and the business is worth $900,000. Change it to 11 and it is worth $1,650,000. Selecting a multiple is not a technical step, it is the valuation.

Asset-based. A car rental business owns $500,000 of vehicles, cash, and equipment, and owes $50,000.

Value = $500,000 − $50,000 = $450,000

Clean, and almost certainly too low if the business is profitable. This method values the fleet and ignores the fact that the fleet earns money.

Market capitalisation. A public company has 1,000,000 shares trading at $14.52.

Value = 1,000,000 × $14.52 = $14,520,000

The simplest calculation and the most frequently misread, because market capitalisation is the value of the equity alone. A company with $5m of debt is worth considerably more than $14.52m as an enterprise.

Discounted cash flow. A business expects $100,000 of free cash flow next year, growing 4% annually for five years, and a buyer discounts at 12% with a 6x exit multiple on the final year.

The five years of cash flow discount back to roughly $387,000. The terminal value, $116,986 of year-five cash flow at 6 times, discounts back to roughly $398,000. Together, about $785,000.

Notice that more than half the value sits in the terminal multiple, which is a guess about a business five years from now. This is normal in discounted cash flow work and it is the reason the method should never be used alone.

Run all four on the same business and the spread is routinely two or three times from bottom to top. That is not a failure of the arithmetic. Each method is answering a slightly different question:

The useful output is the range, not the average. Averaging four methods produces a number that no method supports and that nobody will pay. What experienced buyers do instead is pick the method the business's economics actually fit, use the others as sanity checks, and treat a large gap as a question worth answering. A discounted cash flow far above the multiples valuation usually means the growth assumptions are optimistic. An asset value above the earnings-based methods means the business is worth more dead than alive.

Two businesses with identical EBITDA can trade several turns apart. The difference is almost never the financials themselves:

The single most expensive confusion in small transactions.

Apply an 8x multiple to $150,000 of EBITDA and you get $1.2m of enterprise value. If the business carries $300,000 of debt and holds $50,000 of cash, net debt is $250,000, and the owner receives $950,000. Sellers who negotiate hard on the multiple and then discover the debt comes off the top have lost the argument they should have been having.

Revenue and EBITDA multiples give enterprise value. Price-to-earnings multiples give equity value. Mixing them produces an answer wrong by exactly the size of the debt.

The comparables are rarely comparable. Published multiples come from businesses larger, more diversified, and better capitalised than the one being valued. A small private company almost always deserves a discount to them.

Adjusted EBITDA is where optimism hides. Every add-back is a claim that a cost will not recur under new ownership. Some are legitimate. Many are the owner's car.

Discounted cash flow can produce any answer you want. A point of discount rate and a point of terminal growth, both defensible, can move the result by 40%. The method has the appearance of rigour and the flexibility of a negotiating position.

Illiquidity is real and rarely priced in. A private company cannot be sold in an afternoon. That alone justifies a substantial discount to public comparables.

A valuation is not an offer. No number derived from a spreadsheet obliges anyone to pay it, and businesses that fail to sell usually fail because the owner priced from a model rather than from the market.

Start with the multiples method: take your EBITDA and multiply it by the multiple comparable businesses in your sector have recently sold for. Then check that answer against the asset value and, if your cash flows are predictable, against a discounted cash flow. The calculator above runs all of them so you can see the range rather than a single figure.

It depends on sector, size, growth, and revenue quality, and the honest answer is that you need recent transaction data for businesses genuinely like yours. Published sector averages come from larger companies and usually overstate what a small private business will fetch. Treat any multiple you cannot source to a real transaction as a hypothesis.

Enterprise value is what the operating business is worth regardless of financing. Equity value is what the owners receive after debt is repaid and cash is added back. EBITDA multiples give enterprise value, so a seller with debt on the balance sheet will take home less than the headline number.

Under the asset-based method, it is assets minus liabilities, so $50,000 of assets against $10,000 of liabilities gives $40,000. That figure ignores earning power entirely, which is why a profitable business is almost always worth more than its assets and a loss-making one is often worth less.

None of them is accurate in the way the word suggests, because value is an opinion rather than a measurement. Multiples are the most widely used because they reflect what buyers actually pay. Discounted cash flow is the most theoretically complete and the most sensitive to assumptions. Using several and comparing them is more informative than trusting any one.

Because they measure different things. Asset value measures what the business owns, multiples measure what similar businesses sell for, and discounted cash flow measures what future cash is worth today. A wide gap between them is information, usually about growth assumptions or about whether the assets are actually productive.

Profit, in almost every case, because it is what a buyer can actually take out. Revenue multiples are used mainly for fast-growing businesses that are deliberately unprofitable, and for those the multiple is really a bet on future margins rather than a measure of today's.