Business listing check · United States · USD

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.

See a worked example ↓ · SDE, owner pay and asset questions ↓

Scenario / listing name

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

Required annual surplus after your income goal ($)

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.

1. The listing

Asking price paid to seller ($)Exclude debt you assume separately. For an asset sale, enter the package price.Annual revenue ($)Sales before expenses. Enter 0 if unknown; revenue ratios will be unavailable.Earnings definitionIf the listing only says “profit” or “cash flow,” confirm its definition first.Advertised annual earnings ($)Enter SDE or EBITDA as selected. Negative earnings are allowed.Unsupported add-backs to remove ($)Expenses the seller added back that will still recur for you.Additional annual staffing cost ($)Include a replacement manager if needed. Do not deduct payroll already in earnings.

2. Value assumptions

Industry reference (SDE only)Default 2–3× is an illustrative assumption. Choose an industry or enter your own comparable range.Low earnings multiple (×)Use comparable closed deals, not asking prices.High earnings multiple (×)This sensitivity range is not a statistical valuation interval.Existing debt you assume ($)Only debt that transfers and remains outstanding after closing.Excess cash transferred to you ($)Exclude required operating cash. Not automatically used toward your down payment.Optional net realizable operating assets ($)Equipment, inventory and receivables at resale value, less non-debt liabilities and selling costs. Exclude the cash and debt entered above; 0 skips this cross-check.

3. Financing the purchase

Down payment (%)Planning assumption; not a lender minimum.Acquisition loan annual rate (%)10% example, not a live rate or financing quote.Loan term (years)Fully amortizing loan; 1–30 years.Annual payments on assumed debt ($)Principal plus interest. Include all retained debt and separate seller-note payments, if applicable.Cash-paid closing costs & fees ($)Include lender, legal, accounting and due diligence costs.Extra working capital & reserve cash ($)Your extra cash contribution beyond the price. Not financed by this model.

4. What you need to keep

Annual reinvestment reserve ($)Equipment replacement and ongoing working-capital growth; beyond expenses already in earnings.Your annual income goal ($)Before personal tax. Enter only income not already deducted in earnings or additional staffing.Planning debt coverage target (×)1.25× example. Your lender may calculate this differently.Earnings decline: 20%Stress test: lower adjusted earnings, unchanged debt and reserves.

Estimated price payable to seller$330,000 – $495,000Within your selected range

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

Try a different purchase price: $450,000

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.

Worked example · fictional, not a real 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 commit: your business purchase checklist

0 of 6 reviewed. Check marks stay in this tab; include them in your printed report.

Request three years of tax returns, financial statements and current-year results.Reconcile reported revenue with bank deposits and explain every add-back.Confirm owner hours, replacement labor and key employee retention.Review customer concentration, transferable contracts, leases and licenses.Inventory included assets, working capital, liens and debts that transfer.Obtain written financing terms, seller-note schedule and closing-cost estimates.

Questions before the offer

How much is my business worth—and what would a buyer keep?

Revenue shows sales. Value also depends on transferable earnings, the work required and the terms of the deal. Start with a verified earnings measure before choosing a multiple.

Am I buying an investment or a job?

Illustrative annual figures: $150,000 SDE, $45,000 acquisition debt payments and $15,000 reinvestment reserve. The owner’s work is included in SDE.

SDE: $150,000
Additional manager cost: -$0
Annual debt payments: -$45,000
Reinvestment reserve: -$15,000
Remaining before personal taxes: $90,000

The $90,000 includes compensation for your work. It is not all a passive investment return.

This example assumes these costs have not already been deducted. Test your own earnings, staffing, debt and reserves in the calculator above.

Should I use SDE, EBITDA or the seller’s “cash flow”?

SDE describes the benefit to one working owner; EBITDA is before interest, taxes, depreciation and amortization and ordinarily retains management payroll. An undefined “cash flow” figure is not enough. Ask for a reconciliation from the accounts and use comparable multiples for the same earnings measure.

BizBuySell: earnings definitions and adjustments

Can I add back the owner’s salary and then hire a manager?

You can evaluate both operating arrangements, but include the replacement cost in the managed scenario. Adding back one owner’s compensation does not make their work disappear. Do not subtract a manager twice if that cost is already in your earnings figure. Check hours, responsibilities and whether multiple roles need replacing.

Check the owner-compensation treatment

Do I add equipment and inventory to the earnings valuation?

First define what the price includes. This calculator’s operating earnings value assumes normal operating assets are included, so adding them again would double-count them. Use the separate asset cross-check instead. Excess assets, real estate, inventory adjustments and working capital depend on the deal’s agreed scope.

SBA: buying an existing business and valuation methods

Which add-backs and multiples should I trust?

Keep an adjustment only when it is documented and genuinely changes the buyer’s recurring costs. Ask why an expense will disappear. A claimed one-time expense that recurs each year needs scrutiny. Compare closed deals with similar size, industry, earnings definitions and owner involvement; a seller’s asking price is not a completed sale.

The calculator’s editable range is a sensitivity exercise, not a guarantee of sale price. Stress-test lower earnings and include debt payments, reserves and your income needs.

Reported closed-sale benchmarks

Bring the seller’s financial statements, tax returns, lease, asset list and adjustment evidence to your accountant and lender. SBA acquisition due diligence

Before you enter the seller’s numbers

Use this list to connect the calculation to evidence. A missing document is a question to resolve, not a reason to guess an input.

Revenue and earnings: Reconcile profit-and-loss statements with tax returns and supporting sales records. Keep the period and accounting basis consistent.
Owner pay and add-backs: Request an itemized bridge to SDE or EBITDA, payroll records and an explanation of the owner’s duties. Identify costs that a buyer would still incur.
Debt payments and cash needed: Use a lender’s proposed terms, down payment and fees. List seller financing and assumed debt separately.
Assets and ongoing costs: Check the asset list, inventory terms, lease, working capital and maintenance needs against what the sale actually includes.

SBA guidance on buying an existing business

Next: examine the costs behind a product’s profit →

Try it yourself · 3 questions

Can you spot the buyer’s hidden cost?

Choose an answer to see the reasoning. You can change your choice and try again. All numerical examples are fictional.

1. A fictional business has $150,000 SDE. A replacement manager costs $70,000, debt payments $45,000 and reserves $15,000. What remains before personal taxes?

2. The earnings figure already includes a manager’s salary, and that manager stays. Should you subtract the same salary again?

3. A seller calls a figure “cash flow” but provides no reconciliation. What is the best next step?

0 of 3 explored.

Test your numbers in the calculator →

Read the underlying definitions

Before you make an offer

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.

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.

Teach with this calculator: lesson plan & activity →