Business valuation for retirement exit planning uses the comparable transaction method. A business worth $500K–$2M typically sells at 1–3× annual profit. Service businesses sell at 0.5–2× revenue. Manufacturing at 2–4× EBITDA. Your industry multiplier determines where you fall in that range. The comparable transaction method cross-references your inputs against recent sale data — the same approach business brokers and M&A advisors use when preparing a formal opinion of value. Growth rate matters too: a declining business may sell at 30–50% below the industry median, while a fast-growing business can command a significant premium. BizBuySell's 2025 Insight Report tracked 4,847 closed transactions and found the median multiple for owner-operated businesses under $5M in revenue is 2.5× SDE (Seller's Discretionary Earnings). This free calculator applies that framework to your numbers instantly, without requiring registration.
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Get a low, mid, and high value range using the comparable transaction method — the same approach business brokers and M&A advisors use. Enter 4 inputs and see results immediately.
Total top-line sales before expenses
Net profit + owner salary + add-backs (Seller's Discretionary Earnings)
This calculator uses the comparable transaction method — the same approach business brokers and M&A advisors use. It cross-references your inputs against recent sale data in your industry to produce a defensible value range.
Broker-represented businesses typically sell 15–25% higher than for-sale-by-owner listings and close in half the time. A qualified broker handles buyer vetting, deal structure, confidentiality agreements, and negotiation — so you don't leave money on the table.
Find a Business Broker →The comparable transaction method — also called the market approach — is the most widely used valuation framework for small and mid-sized businesses. Instead of estimating intrinsic value from discounted cash flows, it looks at what buyers actually paid for similar businesses in recent transactions and applies those multiples to your profit figure.
The key metric is SDE (Seller's Discretionary Earnings): your net business profit plus your own salary, benefits, and discretionary add-backs. SDE represents the total economic benefit a full-time owner-operator would receive. Buyers pay a multiple of SDE based on the risk, growth, and industry profile of your business.
| Industry | Typical SDE Multiple | Revenue Multiple | Notes |
|---|---|---|---|
| Service | 1.0–3.0× | 0.5–1.5× | Home services, consulting, B2B services; wide range based on owner dependence |
| Retail | 1.5–2.5× | 0.3–0.7× | Brick-and-mortar and e-commerce; lower multiples reflect thin margins |
| Manufacturing | 2.0–4.0× | 0.4–0.9× | Equipment asset value provides a floor; recurring contracts lift multiple |
| Tech / SaaS | 3.0–8.0× | 1.0–4.0× | Recurring revenue and scalability command the highest premiums |
| Healthcare | 3.0–5.5× | 0.8–2.0× | Regulatory moat and patient relationships; medical practices near high end |
Source: BizBuySell 2025 Insight Report (4,847 transactions) + IBBA Market Pulse Q1 2026
Two businesses in the same industry with identical SDE can sell at very different multiples based on qualitative factors:
Most small business acquisitions under $5M are financed using SBA 7(a) loans. This means lenders — not just buyers — scrutinize your valuation. If your asking price exceeds a supportable multiple for your industry and cash flow, buyers can't qualify for SBA financing and the deal falls through.
Pricing your business at or near the comparable transaction midpoint (not the optimistic high) significantly increases the buyer pool and reduces time on market. An overpriced business may sit for 12–18 months and ultimately sell for less than a properly priced listing.
Many business sales use seller financing or installment structures, where the buyer pays a portion of the purchase price over time. The IRS installment sale rules (Topic 705) allow you to spread capital gains recognition across the payment period, which can reduce your effective tax rate significantly. A CPA with M&A experience should review your deal structure before you accept terms.
The most widely used method is the comparable transaction method (also called the market approach). A broker or M&A advisor looks at recent sales of similar businesses in your industry and applies the median SDE or EBITDA multiple to your profit figure. For businesses under $5M revenue, BizBuySell 2025 data shows the median transaction multiple is 2.5× SDE. A business with $300K in SDE in a standard service industry would typically sell for $600K–$900K at that range.
Industry multiples vary significantly. Service businesses (home services, consulting, B2B) typically sell at 1.0–3.0× SDE. Retail businesses range from 1.5–2.5× due to thin margins. Manufacturing ranges from 2.0–4.0× SDE because of asset value. Tech/SaaS businesses command 3.0–8.0× because of recurring revenue and scalability. Healthcare practices sell at 3.0–5.5× due to regulatory barriers and recurring patient relationships. Source: BizBuySell 2025 Insight Report and IBBA Market Pulse Q1 2026.
Yes. Most business brokers charge a success fee of 8–12% of the total transaction value for businesses under $1M in sale price. For businesses between $1M–$5M, fees typically range from 5–8%. Some brokers use the Lehman formula (5% on the first $1M, 4% on the second, and so on). The fee is paid at closing and comes out of sale proceeds. Despite the cost, broker-represented businesses typically sell 15–25% higher than for-sale-by-owner listings and close in less time.
An informal broker opinion of value (BOV) takes 1–2 weeks. A formal certified business appraisal (CBA or ABV) takes 3–6 weeks and costs $3,000–$10,000 depending on complexity. For SBA financing purposes, lenders typically require a formal appraisal for transactions over $250K. For exit planning purposes, a broker BOV is usually sufficient to set expectations and begin the marketing process.
Yes. SBA 7(a) loans can be used to finance business acquisitions, and lenders require a business valuation to confirm the purchase price is reasonable. For transactions over $250,000 where the buyer is not an immediate family member, SBA guidelines require an independent business appraisal. The valuation must be performed by a qualified appraiser and submitted with the loan package. See SBA.gov for current lending program requirements.
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