If you’re Googling “how much can I sell my business for” you’re usually close to a decision. The fastest way to get a confident answer is to stop thinking in “what I want” terms and start thinking in “what a buyer can verify” terms: clean cash flow + reduced risk + repeatable operations.
Want a realistic estimate of what your business could sell for? Get a valuation range plus the key drivers buyers and brokers will scrutinize.
Get My Business Valuation Range
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Quick answer: Most sale prices come from a simple structure:
- Cash flow (SDE or EBITDA)
- × a multiple (based on risk and growth)
- ± working capital and asset adjustments (varies by deal)
If those acronyms are new, bookmark our glossary of business terms so your whole team is speaking the same language.
The Two Numbers That Drive Your Company’s Sale Price
1) Your real cash flow (SDE or EBITDA)
SDE (Seller’s Discretionary Earnings) is common for owner-operated businesses. It typically starts with profit, then adds back the owner’s salary, owner benefits, and certain one-time or non-operating expenses.
EBITDA is common as businesses get bigger, have deeper management, or attract more sophisticated buyers. It is a cleaner “operating earnings” number (before interest, taxes, depreciation, and amortization).
2) Your multiple (what buyers pay for that cash flow)
The multiple is basically a “confidence score.” Buyers pay higher multiples when your business is easier to operate, easier to verify, and less dependent on any one person (including you).
Simple valuation example
- Verified SDE: $400,000
- Market multiple range: 2.5x to 3.5x (depends on risk and growth)
- Estimated value range: $1,000,000 to $1,400,000 (before deal-structure adjustments)
What Raises Your Multiple (and What Tanks It)
👍 Value boosters (higher multiples)
- Recurring revenue (subscriptions, memberships, service contracts, retainers)
- Low customer concentration (no single customer “controls” your revenue)
- Documented SOPs (how you sell, deliver, bill, and handle issues)
- Management depth (someone besides you can run the day-to-day)
- Clean books (accurate P&L, balance sheet, and consistent reporting)
- Stable margins (buyers love predictability more than hype)
- Multiple lead sources (one channel = one point of failure)
👎 Deal killers (lower multiples)
- Owner dependency (you are the closer, operator, manager, and firefighter)
- Messy receivables (old invoices, weak collections, disputed balances)
- Financial “fog” (unclear add-backs, personal expenses mixed in, inconsistent numbers)
- Key-person risk (one employee holds the whole business together)
- Unresolved compliance or licensing issues (state, local, industry-specific)
If collections are a weak spot, fix it before you go to market. Here’s a helpful primer on business debt collection basics.
A 30-Minute DIY: Estimate What Your Business Is Worth
- Pick your “earnings” metric: use SDE if you are owner-operated; use EBITDA if you have management depth and cleaner ops.
- Calculate a conservative “verified earnings” number: remove anything a buyer will not accept (one-time personal expenses, non-business items, inflated add-backs).
- Pressure test your risk: customer concentration, seasonality, margins, churn, team stability, and owner dependency.
- Choose a realistic multiple range: the more “turnkey” and documented your business is, the higher the range you can justify.
- Add deal adjustments: working capital expectations, inventory, AR quality, equipment, and any unusual liabilities.
Tip: Buyers often sanity-check your numbers against what it costs to run your business today. If you want a simple way to show how costs and prices changed over time, the CPI inflation calculator can help explain price increases without a debate.
Valuation Methods Buyers Use (and When Each One Matters)
| Method | Best for | What it focuses on | Watch-outs |
|---|---|---|---|
| Earnings multiple (SDE/EBITDA) | Most small and mid-sized businesses | Verified cash flow + risk | Add-backs that do not survive diligence |
| Asset-based | Asset-heavy operations | Equipment, inventory, tangible value | Can under-value strong cash-flow businesses |
| Comparable sales | When good comps exist | What similar businesses sold for | Comps are often imperfect or outdated |
| DCF (discounted cash flow) | Larger deals, finance-heavy buyers | Future cash flow projections | Assumptions can be argued endlessly |
How to Get a Higher Sale Price Without “Hoping”
- Build recurring revenue: contracts, retainers, memberships, subscription plans.
- Reduce owner dependency: appoint an ops lead, document SOPs, standardize quoting and delivery.
- Clean up your financial story: separate personal items, tighten add-backs, reconcile accounts monthly.
- Fix AR and collections: get old receivables resolved before diligence starts.
- Diversify acquisition channels: referrals, organic, paid, partnerships, outbound.
Not sure what your “multiple” should be? A valuation range plus a simple “value driver” breakdown helps you see what to fix to push your number up.
See My Estimated Sale Price Range
Disclosure: We may earn a commission if you use our partner link.
What You Should Prepare Before You Talk to Buyers
- 3 years financials + current YTD (monthly breakdown is ideal)
- AR/AP aging (buyers want to see if cash collection is healthy)
- Customer list and concentration (top customers and contract terms)
- Org chart + key employee roles (and retention plan)
- Process docs (sales scripts, SOPs, checklists, QA steps)
- Asset list (equipment, inventory, software subscriptions, leases)
If you also have meaningful digital assets (ranked website, email list, lead magnets, strong inbound), they can increase value. For context on how marketplaces think about digital assets, see our Flippa marketplace review.
Related Guides You Might Want Next
These state-level sell guides help you see how “local reality” affects deal terms and buyer behavior: Selling a business in California, Selling a business in Florida, and Selling a business in South Dakota.
Authority Resources (Worth Reviewing Before You Sell)
If you want to sell in the next 6–18 months, the best move is to get a valuation range and a prioritized “fix list” before buyers set the narrative for you.
Start With a Valuation + Fix List
Disclosure: We may earn a commission if you use our partner link.
FAQ: Business Valuation and Sale Price
How much should I sell my business for?
A good “should” price is a price you can defend with verified earnings, reasonable add-backs, and a multiple that matches your risk profile. If your number depends on hope or “future potential,” it usually gets discounted. If your number is backed by clean reporting and repeatable operations, it becomes easier to negotiate.
What is the difference between SDE and EBITDA?
SDE is common for owner-operated businesses and includes owner compensation plus certain add-backs. EBITDA is a more standardized operating earnings metric used more often as businesses scale. Buyers may start with SDE and convert to an EBITDA view to compare opportunities.
What add-backs do buyers usually accept?
Buyers tend to accept add-backs that are clearly documented, truly one-time, or genuinely non-operating. They push back hard on “creative” add-backs, personal expenses that look recurring, or anything that cannot be proven in your books.
Will a buyer pay for “potential”?
Sometimes, but potential is usually paid through deal structure (earnouts, performance-based payments) instead of a higher upfront price. The most reliable way to get a bigger check at close is to turn “potential” into “proof” before you go to market.
How long does it take to sell a business after valuation?
If your business is already clean (books, operations, team, compliance), a sale can move quickly. If you need to clean up financials, reduce owner dependency, and fix AR or documentation gaps, the preparation phase may take longer than the sale itself.
Note: This content is for educational purposes and does not constitute legal, tax, or financial advice. For help with a specific situation, consult a qualified professional.
