There is no single “right” value for a business. Investors usually look at several methods: a DCF for the value of future cash, the asset value as a floor, and multiples of similar companies as a market check.
How to use the Business Valuation Calculator
- Valuation method
- Annual free cash flow (this year)
- Cash flow growth per year
- Projection period
- Discount rate
- Terminal growth rate
- Total assets
- Total liabilities
- Shares outstanding
- Share price
- Metric (EBITDA, revenue or net profit)
- Industry multiple
Results update as you type, and every field accepts the units shown in its menu.
How it works
Choose a method and enter the figures it needs.
Tips
- Use figures for the same period (a month, a quarter or a year) for every input so ratios compare like with like.
- Track the metric over time – the trend usually tells you more than a single value.
- Compare your result with industry benchmarks, which vary a lot between sectors.
- Treat the result as a starting point for a decision, then check the assumptions behind each input.
Common mistakes to avoid
- Mixing monthly and yearly numbers in the same calculation.
- Using revenue where the formula needs profit (or the other way round).
- Forgetting hidden costs such as taxes, fees, overheads or your own time.
Inputs explained
| Field | What to enter |
|---|---|
| Valuation method | Choose one: Discounted cash flow, Asset-based, Market capitalisation, Industry multiple |
| Annual free cash flow (this year) | Amount in your currency |
| Cash flow growth per year | In % |
| Projection period | In years |
| Discount rate | In % |
| Terminal growth rate | In % |
| Total assets | Amount in your currency |
| Total liabilities | Amount in your currency |
| Shares outstanding | A number |
| Share price | Amount in your currency |
| Metric (EBITDA, revenue or net profit) | Amount in your currency |
| Industry multiple | In × |
Example values
How the main result changes when Annual free cash flow changes and everything else stays at the example values above:
| Annual free cash flow (this year) | Business value |
|---|---|
| 125,000 | 1,493,843.98 |
| 187,500 | 2,240,765.97 |
| 250,000 | 2,987,687.96 |
| 312,500 | 3,734,609.96 |
| 375,000 | 4,481,531.95 |
| 500,000 | 5,975,375.93 |
Formula
DCF: Σ CF × (1 + g)^t ÷ (1 + r)^t + terminal valueAsset-based: assets − liabilitiesMarket capitalisation: shares × priceMultiple: metric × industry multipleWorked example
Inputs — Valuation method: Discounted cash flow; Annual free cash flow (this year): $250,000; Cash flow growth per year: 5 %; Projection period: 5 years; Discount rate: 12 %; Terminal growth rate: 2.5 %; Total assets: $1,500,000; Total liabilities: $600,000; Shares outstanding: 1,000,000; Share price: $4.5; Metric (EBITDA, revenue or net profit): $400,000; Industry multiple: 6 ×.
Results — Business value = $2,987,687.96; Terminal value share of DCF value = 65.38 %.
Frequently asked questions
What is the most common way to value a small business?
A multiple of earnings (often seller's discretionary earnings or EBITDA).
Why does the DCF value change so much?
It is sensitive to the discount and growth rates – small changes move it a lot.
What is a typical EBITDA multiple?
Small private companies often sell for 3–6× EBITDA; it varies by industry and size.
What formula does the Business Valuation Calculator use?
DCF: Σ CF × (1 + g)^t ÷ (1 + r)^t + terminal value.