Business Acquisition Valuation Calculator
Evaluate any business acquisition with revenue multiples, EBITDA multiples, and DCF analysis. See instantly whether the asking price is fair, below market, or overpriced.
Business Acquisition Valuation
The asking price appears to be below the median market valuation. This could be a good deal, but investigate why it is priced low.
Revenue Multiple
0.8x
Median: 5x
EBITDA Multiple
4.0x
Median: 12x
Payback Period
4.0 yrs
DCF Value (5yr)
$1,000,000
Valuation Range
Revenue Multiple Valuation
EBITDA Multiple Valuation
Valuation Comparison
| Method | Low | Median | High |
|---|---|---|---|
| Revenue Multiple | $1,500,000 | $2,500,000 | $4,000,000 |
| EBITDA Multiple | $800,000 | $1,200,000 | $1,800,000 |
| DCF (5-year) | $1,000,000 | ||
| Asking Price | $400,000 | ||
Acquisition Tips
- •Always verify financials with at least 3 years of tax returns and bank statements.
- •Look for customer concentration risk: if one customer is more than 20% of revenue, negotiate a discount.
- •Factor in transition costs: legal fees, due diligence, and the first 90 days of post-acquisition integration.
- •Consider an earnout structure if the asking price is above your valuation but growth potential is strong.
Model Post-Acquisition Scenarios
Want to model post-acquisition scenarios with your real data? Simulate combined cash flow, test downside scenarios, and compare multiple targets.
Start Free TrialHow Acquisition Valuation Works
Enter Business Financials
Input the target's annual revenue, profit, growth rate, industry, and the seller's asking price.
Get Multi-Method Valuation
See revenue multiple, EBITDA multiple, and discounted cash flow valuations side by side.
Compare to Asking Price
Get a clear verdict on whether the asking price is below market, fair, or overpriced for the industry.
Valuation Formulas
Revenue Multiple Valuation:
Valuation = Annual Revenue x Industry Revenue MultipleEBITDA Multiple Valuation:
Valuation = Annual EBITDA x Industry EBITDA MultipleSimplified DCF (5-Year):
DCF = Sum of (Projected Cash Flow / (1 + Discount Rate)^Year) + Terminal ValuePayback Period:
Payback = Asking Price / Annual ProfitExample: Evaluating a SaaS Acquisition
A bootstrapped SaaS product is listed for $400K. Here's how the valuation breaks down using multiple methods:
| Input | Value |
|---|---|
| Annual Revenue | $500,000 |
| Annual Profit (EBITDA) | $100,000 |
| Growth Rate | 15% |
| Industry | SaaS |
| Asking Price | $400,000 |
Results
At $400K, this SaaS business is priced well below the median market valuation of $1.85M (average of revenue and EBITDA methods). The 0.8x revenue multiple is far below the SaaS median of 5x. This looks like a strong deal, but investigate why it is priced so low. Common reasons include high churn, owner dependency, or technical debt. Run a thorough financial due diligence checklist before committing.
Who This Calculator Is For
Acquisition Entrepreneurs
Evaluate businesses listed on marketplaces and determine fair offer prices using industry-standard multiples.
Small Business Buyers
Compare asking prices against market benchmarks before making your first business purchase.
Investors & Advisors
Quickly screen acquisition targets across multiple valuation methods to identify undervalued opportunities.
Frequently Asked Questions
What is a good EBITDA multiple for a small business?
For most small businesses, EBITDA multiples range from 3x to 6x. SaaS companies command higher multiples (8x to 18x) due to recurring revenue and scalability. Service businesses and agencies typically trade at 3x to 7x. The multiple depends on growth rate, customer concentration, owner dependency, and market conditions. Use our business valuation calculator for a deeper analysis.
How do I know if a business is overpriced?
A business is likely overpriced when the asking price exceeds 1.5x the median market valuation for its industry, the payback period is longer than 5-7 years, or the implied multiples are significantly above comparable recent sales. Also watch for sellers pricing in future growth that has not been realized, or including non-recurring revenue in their valuation basis. Always cross-reference with at least two valuation methods.
What is the difference between revenue multiple and EBITDA multiple?
Revenue multiples value a business based on total revenue regardless of profitability. They are used for high-growth companies where profits are reinvested. EBITDA multiples value a business based on its earnings (profit), which better reflects what the buyer actually takes home. For profitable businesses, EBITDA multiples are more reliable. For pre-profit or high-growth SaaS, revenue multiples are standard. Most buyers should look at both and compare the ranges.
Should I use DCF valuation for a small business?
DCF (Discounted Cash Flow) is useful as a sanity check but should not be your only valuation method for small businesses. DCF is highly sensitive to growth rate assumptions and discount rate choices. Small businesses have less predictable cash flows than large companies, making DCF projections less reliable. Use it alongside revenue and EBITDA multiples for a more complete picture. For a detailed walkthrough, see our guide on how to value a business.
What due diligence should I do before buying a business?
Key due diligence areas include: (1) verify 3 years of financial statements and tax returns, (2) analyze customer concentration and churn rates, (3) review all contracts, leases, and obligations, (4) assess owner dependency and key person risk, (5) audit the technology stack and technical debt, (6) confirm intellectual property ownership, (7) check for pending litigation or regulatory issues. Use our cash flow forecast calculator to model post-acquisition scenarios.
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