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M&A Valuation Engine

Business Valuation

Determine the worth of an enterprise. Utilize industry-standard EBITDA multiples to calculate enterprise and equity values with investment-grade precision.

Operational Profile

Balance Sheet Adjustments

M&A Insight: Enterprise Value (EV) represents the total value of the operations. Equity Value represents what the owners actually walk away with after paying off debt.

M&A Analytics

Determining the
Worth of an Enterprise

What is a business really worth? Whether you are buying a company, selling your life's work, or seeking investment, Business Valuation is the foundation of the deal. While there are many methods—from Discounted Cash Flow (DCF) to Asset-Based approaches—the EBITDA Multiple method is the most widely used standard in the middle-market M&A world. It provides a shorthand for how much investors are willing to pay for every dollar of cash flow the business generates.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization. This is a proxy for the actual cash profit a business generates from its core operations.

Enterprise Value

The total value of the company's operations, regardless of how it is financed (debt vs. equity). It is the price tag for the "engine."

The Multiple

A factor that accounts for growth potential, risk, and industry demand. SaaS companies might see 10x+, while service businesses see 3x-5x.

The Bridge: Enterprise to Equity Value

One of the most common points of confusion in business sales is the difference between Enterprise and Equity value.

  • Enterprise Value (EV): EBITDA × Multiple. This is what the business is worth on a "Debt-Free, Cash-Free" basis.
  • Equity Value: EV + Cash - Debt. This is the actual check the buyer writes to the sellers at the closing table.

If a business is worth $10M (EV) but has $2M in debt, the owner only gets $8M. Conversely, if there is $1M in the bank account, the owner gets $11M.

Why EBITDA Matters

EBITDA is used because it "normalizes" earnings. It removes the impact of how a company is financed (Interest), its specific tax environment (Taxes), and its accounting choices (Depreciation/Amortization). This allows an investor to compare a small family business to a large corporation on a level playing field.

Factors Influencing the Multiple

Not all EBITDA is created equal. A company can increase its valuation multiple by:

  • Recurring Revenue: Subscription models always command higher multiples than one-off project work.
  • Customer Concentration: If one customer represents 50% of revenue, the multiple will drop due to high risk.
  • Scalability: Can the business grow 10x without adding 10x the staff?
  • Clean Financials: Audited or reviewed financials give buyers confidence and reduce "Risk Premium."

Industry Multiple Estimates (EBITDA):

  • • Software / SaaS: 8x - 15x
  • • Manufacturing: 4x - 7x
  • • Professional Services: 3x - 5x
  • • Retail / Restaurant: 2x - 4x
  • • Healthcare Services: 5x - 9x

SDE vs. EBITDA

For very small businesses (revenue under $2M), we often use **SDE (Seller's Discretionary Earnings)**. This adds the owner's salary and personal perks back into the profit. For larger companies, EBITDA is the standard because it assumes a professional management team is in place.

How to Use This Tool

Enter your trailing 12-month (TTM) EBITDA and the Industry Multiple appropriate for your sector. Add any Cash on the balance sheet and subtract any interest-bearing Debt. The calculator will provide the Enterprise Value and the Equity Value, along with a Valuation Summary showing how debt and cash move the final needle.