How Much Is Your Business Worth?
Whether you are preparing a sale, seeking financing, or simply want to understand your company's value, knowing what your business is worth is one of the most important financial decisions you will make. Here are the proven methods used by professionals.
Why You Need to Know Your Business Value
Business valuation is not just for selling. It is a critical tool for strategic planning, financing, and protecting your interests.
Selling Your Business
Set the right asking price and negotiate from a position of strength with buyers.
Securing Financing
Banks and lenders require a professional valuation to approve loans and credit facilities.
Partner Buyout or Entry
Establish a fair price when a partner joins, exits, or when shares change hands.
Strategic Planning
Track your company's value over time and measure the impact of your growth strategy.
Estate & Tax Planning
Document your business value for estate planning, insurance, and tax optimization.
6 Proven Methods to Value a Business
Professional valuators use several complementary approaches to triangulate a business's fair market value. No single method tells the whole story.
Revenue Multiples
This method estimates your company's value by applying an industry-specific multiplier to your annual revenue. The multiple is derived from comparable transactions and public market data.
How it works
Your annual revenue is multiplied by a factor (e.g., 0.3x to 3x) determined by your industry, growth rate, and company size. For example, a company with $3M in revenue in a sector where the average EV/Revenue multiple is 0.27x would be valued at approximately $810,000.
Best suited for
Early-stage businesses, high-growth companies, or industries where profitability is not yet stabilized. Also useful as a quick sanity check alongside other methods.
EBITDA Multiples
The most widely used method for established businesses. It values your company based on its earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for non-recurring items.
How it works
First, your EBITDA is normalized by removing one-time expenses, owner perks, and non-recurring items. Then, an industry-specific multiple (e.g., 3x to 8x) is applied. For instance, a company with a normalized EBITDA of $139K and a sector multiple of 5.1x would yield an enterprise value of approximately $709,000.
Best suited for
Profitable, established businesses with stable earnings. This is the go-to method for most M&A transactions and the method banks trust most.
Discounted Cash Flow (DCF)
This forward-looking method estimates your company's value based on its projected future cash flows, discounted back to today's dollars. It captures growth potential that historical methods might miss.
How it works
Future revenue and EBITDA are projected over 5 years, then adjusted for taxes, working capital changes, and capital expenditures to arrive at free cash flows. These cash flows plus a terminal value are discounted using the Weighted Average Cost of Capital (WACC), which typically ranges from 15% to 25% for SMEs depending on risk profile.
Best suited for
Growing businesses with predictable revenue, companies with significant future potential, and situations where historical performance does not reflect future expectations.
Asset-Based Valuation
This method calculates the value of your business by summing up all assets and subtracting all liabilities. Assets are adjusted to their fair market value rather than book value.
How it works
Every asset on the balance sheet (equipment, inventory, real estate, receivables, intellectual property) is revalued to its current market price. Total liabilities are then subtracted to determine net asset value. Intangible assets like brand value or customer relationships may also be included.
Best suited for
Asset-heavy businesses (manufacturing, real estate, distribution), holding companies, or businesses being valued for liquidation purposes.
Debt Service Coverage Ratio (DSCR)
This method evaluates your business's ability to service debt by comparing its net operating income to its total debt obligations. It is the primary metric lenders use to assess financing capacity.
How it works
Your company's normalized EBITDA (or net operating income) is divided by your total annual debt service (principal + interest payments). A DSCR above 1.0x means the business generates enough cash to cover its debt. Lenders typically require a minimum DSCR of 1.2x to 1.5x. For example, a company with $200K in EBITDA and $150K in annual debt service has a DSCR of 1.33x.
Best suited for
Businesses seeking financing, loan applications, refinancing, or any situation where demonstrating debt repayment capacity is critical. Essential for SBA loans, commercial mortgages, and acquisition financing.
Precedent Transactions
This method looks at actual prices paid in recent acquisitions of similar companies in your industry and geography to establish a market-based valuation benchmark.
How it works
Recent M&A transactions involving companies of similar size, industry, and geography are analyzed. The multiples paid in those transactions (typically EV/EBITDA or EV/Revenue) are then applied to your company's financials. This reflects what real buyers have actually been willing to pay.
Best suited for
Businesses preparing for a sale, owners wanting to understand market appetite, and situations where comparable transaction data is available in the industry.
How Hadaly Values Your Business
We combine multiple valuation approaches with real market data to give you a comprehensive, defensible valuation report.
Multiple Valuation Methods
We apply revenue multiples, EBITDA multiples, and DCF analysis simultaneously, then cross-reference results to determine a reliable fair market value range.
Real Industry Benchmarks
Our valuations are powered by transaction databases like Capital IQ, covering thousands of comparable deals across North America.
EBITDA Normalization
We adjust your financials by removing one-time expenses, owner perks, and non-recurring items to reflect the true earning power of your business.
Professional Valuation Report
You receive a comprehensive document with detailed methodology, assumptions, financial analysis, risk assessment, and a clear value range for your business.
Risk & Strength Analysis
Beyond the number, we identify key financial risks and strengths, giving you actionable insights to improve your company's value over time.
Fast & Affordable
Get your valuation in days, not weeks. Our platform automates data collection and analysis, making professional valuations accessible to every business owner.
Frequently Asked Questions
How long does it take to get a valuation?
Once your financial data is connected, Hadaly generates your valuation report within 7 business days. Traditional firms typically take 4 to 8 weeks for the same deliverable.
What documents do I need to provide?
Financial statements for the last 5 years (balance sheet, income statement, cash flow). List of accounting adjustments and discretionary expenses (car, cell phone, travel, etc.). Short-term and long-term debt list (banks, loans, lines of credit, leases, etc.). Detailed accounts receivable and payable (can be anonymized) with aging. Budget or forecasts (optional). Equipment list (year of purchase, estimated value, condition, location). Physical inventory list (value, turnover, obsolescence). T2 and T4 for the last 3 years (owners and key employees). Commercial lease.
Is the valuation legally valid?
Our valuations follow industry-standard methodologies used by professional valuators and financial analysts. While they are not a certified business appraisal (CBV designation), they are widely accepted for financing applications, strategic planning, and preliminary M&A discussions.
Which method is the most accurate?
No single method is universally best. That is why we use multiple approaches and cross-reference the results. The most relevant method depends on your industry, company size, growth stage, and the purpose of the valuation.
How much does a valuation cost?
Our valuations start at a fraction of what traditional firms charge. Visit our pricing page for current plans and options.