Verify the income
Ask for three years of tax returns, profit and loss statements, bank statements, and a current year comparison. Reconcile deposits with reported revenue. Get an itemized explanation and evidence for every seller add-back.
Is this business
worth the asking price?
Go beyond the listing. Compare the price, test the debt, and see what could be left for you.
No account, email, or phone. Your entries stay in this tab.Keep up to three named scenarios, then change the calculator for the next one. Saved comparisons stay in this tab and disappear when you leave. To save a file, choose “Save as PDF” in your browser’s print dialog.
Work backward to a price
Price ceiling under these assumptions: $709,417
Holds every other input fixed, including down-payment percentage, taxes entered as dollar amounts, and income. This is a cash-flow ceiling, not a valuation, approval, or check that you have the upfront cash. Revisit the cash needed after applying it.
Based on your 2–3× SDE range, adjusted for assumed debt and acquired excess cash. A range match does not establish a fair deal.
The asking price in context
Price / adjusted SDE2.73×
Price / revenue0.50×
Adjusted earnings margin18.3%
Total debt / adjusted earnings2.18×
Price ratios use $450,000: seller price + assumed debt − acquired excess cash. Debt includes the new acquisition loan and assumed debt. SDE leverage is not debt / EBITDA.
Could it support the payments?
New loan payment / month$4,757
Planning debt coverage2.63×
Meets your selected debt coverage target on these assumptions.
Adjusted annual earnings$165,000
Less additional staffing-$0
Less reinvestment reserve-$15,000
Less all annual debt payments-$57,089
Available before your income goal & taxes$92,911
Less your income goal-$60,000
Annual surplus / shortfall before taxes$32,911
Available cash is a planning estimate, not accounting net income. Your income goal is not deducted again if already included elsewhere.
Cash needed & downside
Initial buyer cash needed$135,000
Surplus / initial cash, before taxes24.4%
$90,000 down + $15,000 costs + $30,000 working capital. Acquisition loan: $360,000. The return measure excludes resale value, principal equity buildup, and taxes; SDE can include payment for your labor.
Coverage with earnings down 20%2.05×
Stressed annual surplus after income goal-$89
What needs a closer look
The downside scenario leaves a shortfall. Consider more reserves, less debt, or a lower price.
No replacement labor cost entered. This assumes you can do the seller’s work yourself or it is already covered in expenses.
Zero entries are assumptions, not verified facts. Confirm debt schedules, taxes, owner hours, cash reserves, and the costs of keeping the business running. Results reflect entered numbers, not a review of the listing.
An asking price can fit a range and still strain the buyer
The example lists a business at $450,000 with $180,000 advertised SDE. Removing $15,000 of unsupported add-backs leaves $165,000. An illustrative 2–3× range gives $330,000–$495,000 before debt and excess-cash adjustments.
What to look for: Being inside that range does not establish a fair deal. The buyer still needs to pay acquisition debt, reinvest in the business and meet their income goal. Verify the seller’s add-backs before using them.
The example figures above stay fixed while you edit your own scenario. Use “Load example” to restore default inputs where available.
Before you make an offer
Understand what transfers
Confirm inventory, equipment, working capital, customer contracts, and lease rights. Find out which debts are paid off by the seller and which you assume. Do not count seller debt you will not inherit.
Price the work and the risks
Check owner hours, staff retention, customer concentration, franchise fees, lease renewals, deferred maintenance, and licenses. A business dependent on one person or customer needs closer investigation.
How this business valuation calculator works
Positive adjusted earnings times your low and high multiples gives an operating value range. We subtract assumed debt and add acquired excess cash to estimate the price payable to the seller. Normal operating equipment is already part of an earnings valuation: do not add it again. Real estate, unusual assets, distressed companies, and complex transactions need separate analysis.
SDE includes the benefit to one working owner before acquisition debt and personal taxes. EBITDA usually includes management payroll already. Only deduct labor costs that are missing from the earnings you entered. This tool does not convert undefined listing “cash flow” or net profit into either measure.
Planning debt coverage equals adjusted earnings minus additional labor and annual reinvestment, divided by all entered annual loan payments. The adjustable 1.25× target is a planning assumption, not an SBA approval rule. Owner income is shown separately; lender underwriting and tax treatment differ. The downside scenario reduces earnings, not revenue.
Source: BizBuySell full-year 2025 closed transaction tables. Selected industry cash-flow multiples are historical averages from reported sales, not appraisals or an EBITDA dataset. Reviewed September 6, 2026. The ±0.5× preset range is our editable sensitivity assumption, not a published confidence interval.
SBA 7(a) financing information: business ownership changes may qualify. Rates are negotiated with lenders subject to program limits. Use a lender quote here; the example rate is illustrative. The model uses one fully amortizing acquisition loan plus separately entered payments on assumed debt. It does not model balloon payments, variable-rate resets, or separate seller-note schedules.
This is an educational first look, not a business appraisal, loan offer, or investment recommendation. Confirm the numbers with an accountant, lender, and transaction adviser before committing.