Business Valuation Calculator

Put a defensible number on a service business using Seller's Discretionary Earnings and a multiple tuned to its trade. Dial in recurring revenue, customer concentration, management depth, and growth to see where it lands in the range.

Financials (last 12 months)

Revenue

Net income (per tax return)

Owner's salary / draw

Owner perks (auto, insurance, travel)

Interest expense

Depreciation & amortization

One-time / non-recurring expenses

Multiple drivers

Industry

Management depth

Recurring revenue50%

Customer concentration25%

Growth (3-yr CAGR)

Estimated valuation

Range based on HVAC comps and your business profile.

Midpoint estimate

$1,251,250

at 3.25x SDE

SDE

$385,000

SDE margin

19.3%

Low (2.5x)

$962,500

High (4.5x)

$1,732,500

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How service businesses actually get priced

Below roughly a million dollars in earnings, buyers price a service company off Seller's Discretionary Earnings, not revenue. SDE rebuilds the full economic return one owner-operator actually pockets: their pay, the perks the business covers, and add-backs for anything that won't repeat for the next owner.

What pushes the multiple up or down

Contracted, repeating revenue (service agreements, route work) is the single strongest lever on price.
Customer concentration cuts the other way. One account carrying more than a quarter of sales pulls the number down.
Who runs it matters: a shop that can't function without the owner trades at the bottom of the band.
Momentum counts. Sustained growth north of 20% a year can lift a business past its comparable range.
License portability. Trades where the qualifying license leaves with the owner are marked down for the transfer risk.

When to switch from SDE to EBITDA

SDE fits owner-run businesses where a single buyer steps into the owner's shoes. Once a company clears roughly a million in earnings and starts attracting private-equity or strategic buyers, move to EBITDA with a market-rate manager's salary already subtracted. On the same business, EBITDA multiples typically run about one to one and a half turns richer than SDE multiples.