Resource
How much is my business worth?
The honest answer is a range, built from normalised earnings and tested against cash flow. This page explains how that range is arrived at, what moves it, and how to get one in writing for your own business.
Written by CA Pranay Bhansali, Founder & Principal, Volaxi — Chartered Accountant (ICAI), former senior buy-side research analyst.
Last reviewed September 2026 · LinkedIn
The Short Version
- Short answer
- A multiple of normalised EBITDA, cross-checked against a discounted cash flow — expressed as a range, not a number.
- Typical anchor
- 3x–6x EBITDA for owner-dependent small businesses; 6x–12x for scaled, diversified, professionally managed ones.
- Biggest lever
- Normalised earnings. A one-point EBITDA adjustment moves headline value by the whole multiple.
- What you receive
- Enterprise value first; what a shareholder banks is equity value, after the net debt and working capital bridge.
- Get a number
- Indicative range in the browser via the calculator, or a written range prepared by a Chartered Accountant, complimentary.
How The Number Is Built
- 01
Start from the last twelve months of trading, not the last completed statutory year — buyers price what the business is doing now.
- 02
Normalise earnings: remove owner-specific, related-party and one-off items; add back costs a buyer would have to incur.
- 03
Apply a multiple drawn from comparable listed peers and recent precedent transactions in the same sector and size band.
- 04
Cross-check with a discounted cash flow, using a discount rate built from CAPM and the business's actual capital structure.
- 05
Bridge from enterprise value to equity value: deduct net debt and debt-like items, adjust for the working capital peg.
- 06
State the range, the method and the assumptions, so a counterparty can test each of them.
Typical Multiple Ranges
- Owner-dependent services business
- 2x–4x normalised EBITDA. Value is tied to the principal; buyers price retention risk.
- Established SME, professional management
- 4x–7x normalised EBITDA, depending on growth, margin and concentration.
- Recurring-revenue or contracted business
- 7x–12x EBITDA, or a revenue multiple where margins are deliberately reinvested.
- SaaS and subscription
- Usually valued on ARR multiples, driven by net revenue retention, growth rate and gross margin rather than EBITDA.
- Asset-heavy or loss-making
- Net asset value or an orderly liquidation basis, with earnings methods used only as a cross-check.
These are orientation ranges observed across mid-market transactions, not a quotation for your business. Two companies with identical EBITDA routinely transact several turns apart on the strength of their earnings quality and customer base.
What Moves The Number Most
Normalised EBITDA, not reported profit
Reported profit in an owner-managed business is rarely the earnings a buyer acquires. Above-market owner remuneration, related-party rent, personal costs run through the company, one-off legal or restructuring charges and discontinued lines are all removed; understated costs a buyer would have to incur — a market salary for the departing owner, unbooked leave liability, deferred maintenance — are added back in. The resulting number is the base the multiple applies to.
Concentration and dependence
A business where the top customer is 40% of revenue, or where the owner holds every key relationship, attracts a discount regardless of profitability. Buyers price the risk that the earnings do not survive the transaction. Diversified revenue, contracted or recurring income and a second layer of management are the cheapest value you can build before a sale.
Growth and its cost
Growth raises the multiple only when it is funded. A business growing 30% while consuming all its cash in working capital is worth less than a slower one converting earnings to cash. Buyers look at EBITDA-to-cash conversion, maintenance capital expenditure and the working capital absorbed per rupee of new revenue.
Quality of the record
Clean, reconciled accounts with an audit trail narrow the valuation range. Incomplete records widen it, and every point of uncertainty is priced against the seller. Preparation is worth real money — often more than a negotiation tactic.
The bridge from enterprise to equity value
Headline value is enterprise value. What a shareholder receives is that figure less net debt and debt-like items — deferred consideration, factored receivables, unfunded liabilities — adjusted for any shortfall against a normalised working capital peg. Sellers routinely discover the gap late, when it is no longer negotiable.
Common Questions
How much is my business worth?
In most cases, a multiple of normalised EBITDA cross-checked against a discounted cash flow, expressed as a range. For an owner-dependent small business the anchor is usually 2x to 4x normalised EBITDA; for a scaled, diversified, professionally managed business it is commonly 6x to 12x. The precise figure depends on earnings quality, customer concentration, growth funding and the quality of your financial records.
How do I calculate the value of my business quickly?
Take last twelve months' EBITDA, remove owner-specific and one-off items to get normalised EBITDA, apply a multiple appropriate to your sector and size to get enterprise value, then deduct net debt and any working capital shortfall to reach equity value. The Volaxi business valuation calculator performs this in the browser and returns an indicative range.
Is revenue or profit used to value a business?
Profit, in almost all cases — specifically normalised EBITDA. Revenue multiples are used only where margins are deliberately suppressed by reinvestment, typically in subscription software, or where the business is pre-profit and value rests on growth.
How can I increase what my business is worth before selling?
Reduce customer concentration, move revenue onto contracts, build a management layer that can operate without you, clean and reconcile the accounts, and evidence every add-back you intend to claim. These raise both the earnings base and the multiple applied to it, and most take twelve to eighteen months to show in the numbers.
Can I get a valuation without paying for one?
Yes. Volaxi provides one complimentary indicative valuation per company: a written range with the method, the key assumptions and the drivers behind the number, prepared by a Chartered Accountant and returned within two business days of receiving financials.
Get Your Own Range
Complimentary indicative valuation
A written range with methodology and key drivers, returned within two business days. One per company, no obligation.
Business valuation calculator
Multiple and discounted cash flow approaches side by side, computed in the browser.
Business valuation FAQ
Cost, timing, information required, and what a counterparty will test in the work.
Discuss an Engagement
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