How Much Is My Business Worth?

The short version: price is a multiple of earnings

Buyers don’t pay for revenue. They pay for the cash the business will put in their pocket, adjusted for risk. So almost every small business is priced the same way:

Earnings × multiple = asking price

The two numbers you need are which earnings figure to use, and which multiple applies to a business like yours.

Which earnings figure buyers use

Business size	Earnings figure	What it includes
Owner-operated, most businesses under about $1M in earnings	Seller’s discretionary earnings (SDE)	Pre-tax profit plus the owner’s salary, owner perks, interest, depreciation and one-off costs
Larger, with a management team in place	EBITDA	Earnings before interest, taxes, depreciation and amortization, after paying a market salary to run the business

SDE answers “what would one owner take home?” EBITDA answers “what does the business earn if the owner is replaced by a paid manager?” That’s why the same company has a higher SDE than EBITDA.

What small businesses are selling for in 2026

BizBuySell tracks closed sales reported by brokers across the U.S. In Q2 2026:

• The average cash-flow (SDE) multiple was 2.7, up 2% from a year earlier.
• The median sale price was $349,250.
• Median cash flow was $155,921, and median revenue was $692,087.
• The average revenue multiple was about 0.7.

Over BizBuySell’s longer five-year data set (Q3 2021 to Q2 2026), average earnings multiples range from 2 to 3.3 across popular sectors, and 2.58 across all sectors.

A worked example

Say your business has $300,000 in SDE and sits close to the market average:

$300,000 × 2.7 = about $810,000

That’s a starting point, not a price. The next two sections explain why yours could land well above or below it.

Why multiples vary by industry

BizBuySell’s industry data shows average earnings multiples from about 1.5 at the low end to 5 or more for select high-value categories. Buyers pay more for businesses with:

• Recurring revenue, such as service contracts, subscriptions or retainers
• Low owner dependence, meaning customers and staff don’t rely on you personally
• Steady or growing earnings over three or more years
• Clean, provable financials that match your tax returns
• No single customer making up a large share of revenue

The Q2 2026 report put it bluntly: buyers are underwriting more strictly, and businesses with predictable earnings and well-documented financials are the ones commanding premium prices.

When private equity changes the math

Once a business earns roughly $500,000 or more in EBITDA, private equity firms and other institutional buyers start to compete, and pricing moves to EBITDA multiples.

Buyer type	Typical target size (EBITDA)	Typical multiple
PE add-on (bolt-on to an existing platform)	$500K–$10M	3–7×
Independent sponsors and search funds	$500K–$5M	3–6×
Family offices	$2M–$25M	5–10×
PE platform funds	$5M–$50M+	4–12×

Source: CT Acquisitions, 2026 Lower Middle Market Buyer Mandate Report.

For context, among larger middle-market companies, Capstone Partners reports that private equity sponsors paid an average of 12.0 times EBITDA through Q3 2025, against 9 times for private strategic buyers. Those deals are much bigger than most small businesses, but they show why owners near the $1M EBITDA line often see a jump in interest.

How to get a number for your own business

For a quick range, try our free business valuation calculator, which applies BizBuySell’s industry multiples to your earnings.

1. Rebuild your earnings. Take three years of tax returns and add back owner salary, perks and one-off costs to get SDE. Then subtract a market-rate manager salary to estimate EBITDA.
2. Find your industry’s range. BizBuySell publishes industry multiples, and broker listings in your area show what similar businesses are asking.
3. Adjust for your risk. Move toward the top of the range for recurring revenue and a strong team, and toward the bottom if you are the business.
4. Get a formal valuation if the number matters for a negotiation, a partner buyout or an estate plan. A certified valuation is also what lenders and courts rely on.