SDE-multiple business valuation
What your business is worth, shown in the open.
For owners of Main Street businesses — restaurants, salons, contracting and trade businesses — sizing up what theirs would sell for. Your earnings, an industry multiple from published sold-business data, and every factor behind the number named and priced. Free, no sign-up.
Run your numbers ↓1Your business
Sets the base multiple from published sold-business data. If yours isn't listed, pick its sector at the bottom of the menu.
Used only for a revenue-multiple cross-check — it never drives the estimate.
2Earnings — the SDE worksheet
SDE (Seller’s Discretionary Earnings) is pre-tax profit plus everything the business pays that a new owner wouldn’t have to — the standard earnings measure for pricing owner-operated businesses.
Bottom line from your most recent tax return or P&L, before income taxes. Losses are allowed — enter a negative number.
Add back — costs a buyer wouldn’t inherit
Salary, payroll taxes, and benefits for one full-time owner-operator. If several owners work in the business, add back one — the others count at replacement cost.
Interest on business debt. A buyer brings their own financing, so it's added back.
Non-cash expenses from your tax return or P&L.
Costs that won't repeat — a lawsuit, a flood repair, a one-off equipment move.
Non-business spending paid by the business — a personal vehicle, family phone plans, travel that wasn't business.
Subtract — income a buyer can’t count on
Income that won't repeat — a grant, an insurance payout, a one-off asset sale. Subtracted.
3Value drivers
Each answer moves the multiple above or below your industry’s average by a stated amount — every adjustment is shown in the breakdown.
The more the business depends on the current owner personally, the less of it a buyer can actually purchase.
A longer track record under one owner is easier for a buyer (and their lender) to underwrite.
Buyers price the future; the recent trend is the strongest signal they have.
Buyers pay for earnings they can verify. Unreported cash may be real, but it can't be underwritten.
For a location-dependent business, the lease is part of what's being sold.
Revenue that depends on a few accounts can leave with them.
Estimated sale price
Fill in the earnings worksheet and the estimate appears here — with the full math under it.
A starting estimate from national averages — not a broker’s opinion of value or a formal appraisal. Informational only, not professional advice. Full methodology below.
Methodology — the whole formula, in the open
Estimated sale price = SDE × applied multiple, shown as a ±10% range. Three parts, each with its source:
1 · SDE, per the IBBA definition
Seller’s Discretionary Earnings is the standard earnings measure for owner-operated businesses, as defined by the International Business Brokers Association’s glossary: earnings before income taxes, interest, depreciation and amortization, non-operating and non-recurring items, and one owner’s entire compensation. The worksheet above computes it as pre-tax net profit, plus one owner's total compensation, interest expense, depreciation & amortization, one-time, non-recurring expenses, personal expenses run through the business, minus one-time, non-recurring income. Only one owner’s compensation is added back — additional working owners count at what it would cost to replace them.
2 · The base multiple, from published transaction data
Every industry multiple in the menu is transcribed from BizBuySell’s Business Valuation Multiples by Industry, which aggregates reported sales of small businesses over a trailing five-year window — currently businesses sold Q3 2021 – Q2 2026, updated biannually. Multiples are averages of sale price ÷ reported SDE across those transactions. 80% of businesses in the source data set sold between $50,000 and $2,000,000 — the “main street” segment. No multiple on this site is a rule of thumb.
3 · Factor adjustments — our stated assumptions
The value drivers (owner dependence, operating history, revenue trend, quality of books, premises, customer concentration) are the standard qualitative factors business brokers assess. The weights below are MainStreetWorth’s own stated assumptions — not published constants — and every one is shown in your breakdown, so you can discount any you disagree with:
- How the business runs without you. I run day-to-day operations myself (−0.20×) · I manage it, but staff handle daily operations (no change) · A manager runs it — I'm mostly hands-off (+0.20×)
- Years under current ownership. Under 3 years (−0.15×) · 3–10 years (no change) · More than 10 years (+0.10×)
- Revenue trend over the last 3 years. Declining (−0.25×) · Roughly flat (no change) · Growing (+0.15×)
- Financial records. Clean books — tax returns match the P&L (+0.10×) · Mostly documented, some gaps (no change) · Significant unreported cash (−0.30×)
- Premises & lease. Transferable lease with 3+ years left (or premises owned) (+0.10×) · Short or month-to-month lease (−0.15×) · No fixed premises (mobile or home-based) (no change)
- Customer base. Diversified — no customer is over 10% of revenue (+0.05×) · Somewhere in between (no change) · A few customers make up most of revenue (−0.20×)
Assumptions & limits
- The final range is the midpoint ±10% — a stated assumption reflecting that even a well-grounded multiple is a starting range, not a price.
- The applied multiple is floored at 0.5×. Below that, businesses are usually priced on assets, not earnings, and this method stops applying — as it also does whenever SDE isn’t positive.
- Multiples are national averages over five years of sales. Local market strength, timing, and deal structure (SBA financing, seller notes, earnouts) all move real outcomes.
- The estimate prices the operating business. Saleable inventory and owned real estate are typically negotiated on top of, or separately from, this number.
- The SDE method fits owner-operated Main Street businesses. Larger companies with management in place trade on EBITDA multiples instead, which this tool does not model.
Sources: IBBA glossary (SDE definition) · BizBuySell valuation multiples (businesses sold Q3 2021 – Q2 2026)
Last reviewed: July 2026. This calculator is informational only and is not professional, financial, or valuation advice.
Frequently asked questions
What is SDE (Seller's Discretionary Earnings)?
SDE is the total annual financial benefit a business provides to one full-time owner-operator: pre-tax net profit plus one owner's entire compensation, interest, depreciation and amortization, and any one-time or personal expenses the business paid. It is the standard earnings measure for pricing owner-operated small businesses, because it shows a buyer what the business actually puts in the owner's pocket. This calculator follows the IBBA's published definition.
Where do the industry multiples come from?
Every base multiple in this calculator is transcribed from BizBuySell's published valuation-multiples report, which aggregates real reported sales of small businesses over a trailing five-year window (currently businesses sold Q3 2021 – Q2 2026, updated biannually). 80% of businesses in the source data set sold between $50,000 and $2,000,000 — the “main street” segment. None of the multiples here are invented rules of thumb.
Is this a formal business valuation or appraisal?
No. This is a starting estimate built from national-average multiples and your own inputs. A broker's opinion of value or a formal appraisal also weighs local comparable sales, your actual financial statements, deal structure, and market conditions — and can land meaningfully above or below this range. Use this number to walk into that conversation informed, not to replace it.
What's not included in the estimate?
Inventory, real estate, and deal terms. Sold-business multiples generally price the operating business; saleable inventory and any owned real estate are typically negotiated on top of (or separately from) the business price. Financing structure — SBA loans, seller notes, earnouts — also moves the final number. And because the multiples are national averages, a strong or weak local market isn't reflected.
Related tools
Work out Seller's Discretionary Earnings line by line — owner compensation, financing and non-cash expenses, one-time items, and the normalization adjustments that cut both ways — per the IBBA's standard definition.
Open tool →Look up the published SDE and revenue multiples — and median sale prices — for dozens of Main Street industries, from real sold-business transaction data.
Check whether a business can afford its own purchase price: SBA 7(a) loan terms, a seller note, and the debt-service coverage ratio the way a lender computes it.