Business Valuation Calculator: SDE & EBITDA Multiples by Industry
Enter your industry, SDE or EBITDA, recurring revenue %, customer concentration, and growth rate. Live output: low / midpoint / high valuation range with adjustment factors applied. Multiples calibrated to April 2026 BizBuySell, Pepperdine, IBBA, and industry advisory transaction data.
Covers 20 industries including HVAC, plumbing, electrical, landscaping, auto repair, restaurants, ecommerce, professional services, manufacturing, self-storage, hotels, home health, dental practices, fitness, SaaS, and multi-unit franchise resale.
Last updated: ·By Ed Freeman, Capital Advisor — PeerSense
Business Inputs
Recurring-service contracts add 0.5–1.0x premium.
SDE (Seller's Discretionary Earnings) for owner-operated <$1M SDE. EBITDA for $1M+ with professional management.
Maintenance contracts, subscriptions, long-term agreements. Higher = multiple premium.
Higher concentration = discount. 40%+ top customer triggers serious risk pricing.
Positive growth = premium; declining revenue = steep discount.
Indicative Valuation Range
Adjustment Factors Applied
Indicative valuation only. Actual purchase price depends on asset mix (real estate vs. operating business), earn-out / seller-note structure, working capital adjustments, environmental liabilities, industry cycle, and the specific buyer pool (strategic vs. PE vs. search fund). Multiple ranges calibrated to April 2026 BizBuySell, Pepperdine, IBBA, and industry advisory transaction data. This is NOT a formal appraisal — consult a certified business valuation expert (CVA, ASA, ABV) or M&A advisor for transaction pricing.
SDE vs. EBITDA — Which Metric Applies to Your Deal?
SDE — Seller's Discretionary Earnings
Use for: owner-operated businesses under $1M SDE, single-location service businesses, independent restaurants, small franchisees. SDE adds back the owner's full compensation + benefits + one-time expenses to show the "full benefit" of ownership to a new owner-operator.
Formula: Net Income + Owner Salary + Owner Benefits + Non-Recurring Expenses + Depreciation + Amortization + Interest.
EBITDA — Earnings Before Interest, Tax, Depreciation, Amortization
Use for: professionally-managed businesses with $1M+ EBITDA, multi-unit operators, platform acquisitions by PE firms, search-fund targets. EBITDA does NOT add back owner compensation (assumes a market-rate manager replaces the owner).
Formula: Net Income + Interest + Taxes + Depreciation + Amortization. Market-rate manager salary is assumed as an expense.
The "Adjusted EBITDA" Bridge
In the $1M–$5M range, many deals are valued on Adjusted EBITDA: EBITDA plus one-time legal/consulting fees, non-recurring capex, owner benefits that would be eliminated post-sale, and other normalization adjustments. Quality-of-earnings (QofE) analysis by a CPA firm is standard for deals above $3M — buyer or lender will require it regardless.
Six Factors That Move Your Multiple Up or Down
Recurring Revenue
Maintenance contracts, subscriptions, long-term service agreements. 50%+ recurring revenue typically adds 0.5–1.0x to the multiple vs. pure transactional revenue at the same SDE/EBITDA.
Customer Concentration
Top customer >40% of revenue = 20% multiple discount. Top customer >50% = deal often falls apart entirely or requires heavy seller financing + earnout. Spread your rev across 20+ accounts before selling.
Revenue Growth Rate
Flat business at industry baseline. 15–25% YoY growth adds 10–15% to multiple. 25%+ growth often doubles it. Declining revenue (negative YoY) triggers distressed pricing regardless of absolute SDE.
Real Estate Ownership
Seller owns the operating real estate. Buyer can separate the real estate purchase (cap-rate-based) from the business purchase (multiple-based). Often unlocks SBA 504 financing + 1031 exchange optionality.
Management Team Depth
Key employees with employment contracts + non-competes who stay post-sale. Seller-dependent business (owner does sales + ops + finance) triggers 0.5–1.5x multiple discount because the transition risk is real.
Industry Tailwinds vs. Headwinds
HVAC / plumbing / electrical enjoy strong tailwinds from aging workforce + housing stock. Retail / hospitality more cyclical. Declining industries (print media, fossil fuel retail) price 1–2x below baseline.
You Have a Valuation. What's Next?
- 1Validate with a formal QofE. For deals above $3M total consideration, a Quality-of-Earnings report by a CPA firm ($15K–$60K) normalizes EBITDA, flags non-recurring items, and tests customer/vendor concentration. Required by most SBA and conventional lenders above $2M.
- 2Model the capital stack. Map the purchase price across SBA 7(a) (up to 90% LTV, 10–25 yr amort), seller note (typically 10–25% of price, 7–10 yr, 6–8%), mezzanine debt ($1M+ deals), and sponsor equity. Use our Business Acquisition Calculator to model different capital stack scenarios.
- 3Pre-qualify your lender. SBA 7(a) for owner-operator acquisitions. SBA 504 if real estate is included. Conventional bank for $5M+ with mature cash flow. Private credit / mezzanine for deals above $10M or complex structures. SBA hub.
- 4Negotiate the LOI. Valuation is one number. Deal structure — earn-outs, escrows, working capital adjustments, seller note subordination — can move effective purchase price by 20–30% either direction. Get capital advisory involved before signing the LOI, not after.
- 5Close with PeerSense. We structure the debt + equity stack, shop 500+ capital sources, handle the SBA package or institutional term sheet, and close in 60–120 days depending on complexity. No upfront retainer — fee at closing only.
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Business Valuation Sources (April 2026)
- Pepperdine Private Capital Markets Report — Quarterly survey of lenders, investors, and brokers — primary benchmark for lower-middle-market EBITDA multiples.
- BizBuySell Insight Report — Quarterly report on small-business transaction prices and multiples across industries — primary source for SDE benchmarks under $1M.
- IBBA Market Pulse Report — International Business Brokers Association quarterly survey of deal activity and multiples in Main Street (<$2M) through lower-middle-market ($2M–$50M).
- Capstone Partners — M&A Sector Updates — Investment bank transaction comps and EBITDA multiple benchmarks by sector (HVAC, manufacturing, business services, healthcare).
- SBA 7(a) Acquisition Financing Guide — Official SBA 7(a) program guidance for business acquisition loans — up to $5M, 10-year term, 90% LTV in many structures.
- AICPA Statement on Standards for Valuation Services — AICPA SSVS-1 professional standards for business valuation engagements — the framework CPA firms follow for formal valuations.
External links are provided for informational and verification purposes. PeerSense is not affiliated with and does not endorse any third-party site. Information was current at the time of publication.
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Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated April 2026.
Disclaimer: This calculator produces indicative valuation ranges only. Actual purchase prices in U.S. small and lower-middle-market M&A depend heavily on specific asset mix (real estate vs. operating business), earn-out / seller-note structure, working capital adjustments, environmental liabilities, pending litigation, customer contract assignability, industry cycle, and the specific buyer pool. Multiples shown reflect approximate April 2026 BizBuySell / Pepperdine / IBBA / Capstone transaction benchmarks and are NOT a formal appraisal. For transaction pricing, engage a certified business valuation expert (CVA, ASA, ABV) or M&A advisor. PeerSense is a capital advisory firm, not a lender, appraiser, or broker-dealer.