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What is the average valuation for a small business?

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How to Value Your Small Business: Multiple of Earnings. Although there are many different ways to value small businesses, I consider the core method for valuing small businesses, especially very small businesses, to be “multiple of earnings. read more

You can imagine how an owner might inflate both of these as a way to reduce the business’s tax burden. Most small businesses sell for 1.5 to 3.75 x SDE. You might find our piece on the topic to be helpful, you can check it out here: The Complete Guide to Small Business Valuation. read more

Next, average that number over the three years. If the result is $100,000 or less, multiply it by two; if it’s $100,000 to $300,000, multiply it by three; if it’s over $500,000, multiply by four. “The conventional wisdom says that most small businesses sell for between two to three times’ discretionary earnings. read more

For larger small businesses, such as middle-market companies with sales of several million dollars up to several hundred million dollars, valuation may be more commonly thought of in terms of a multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization). read more

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