Find out how much your business is worth using EBITDA multiples, Seller's Discretionary Earnings (SDE), and revenue multiples — then see how much you can borrow.
Accurate business valuation is the cornerstone of any successful acquisition — whether you are buying a company, selling one, or refinancing. For SBA 7(a) loan financing, lenders use the valuation to determine the maximum loan amount they will extend and to confirm the purchase price is reasonable relative to the business's earnings power. Overpaying for a business not only increases your debt load but can result in a DSCR that falls below the SBA's required 1.25x minimum, causing the loan to be declined even if you are otherwise qualified.
There are three primary valuation methods used by business brokers, M&A advisors, and SBA lenders:
Best for larger businesses (EBITDA > $500K) where a professional management team will remain in place after the sale. EBITDA is a proxy for operating cash flow before capital structure and tax decisions. Industry multiples typically range from 1.5x (restaurants) to 8x+ (SaaS technology). SBA lenders frequently use EBITDA multiples to benchmark the asking price against comparable transactions.
The preferred method for small businesses where the owner is the primary operator. Seller's Discretionary Earnings adds back the owner's salary, personal perks, and one-time expenses to normalize cash flow to a new owner who would replace themselves. SDE multiples are typically 20–40% lower than EBITDA multiples because the new owner's labor must be accounted for. Most Main Street businesses sell for 2–3.5x SDE.
Used when earnings are minimal or negative (startups, turnarounds) or for industries where revenue is the primary driver of value (media, SaaS, agencies). Revenue multiples range from 0.1x for low-margin commodity businesses to 2x+ for recurring-revenue SaaS companies. SBA lenders view revenue multiples with more skepticism — they always want to underwrite to actual cash flow. Use this as a sanity check, not a primary method.
When preparing for an SBA acquisition loan, lenders will commission an independent business valuation (typically from a Certified Valuation Analyst or Certified Business Appraiser) for transactions over $250,000. The appraised value must support the purchase price — if it comes in lower, the seller must reduce the price or the buyer must make up the difference in cash. Using this calculator to estimate value before engaging a formal appraiser helps you negotiate the right price from the start.
Internal links: see our SBA loan calculator to model monthly payments once you have a valuation, or review SBA eligibility requirements before starting the acquisition process. Once you have a valuation and loan amount in mind, compare the top SBA lenders to find the best fit for your deal.
The following table reflects typical market transaction multiples as of 2025. Actual deal multiples vary based on business size, growth rate, customer concentration, contract-based revenue, and overall market conditions. Deals with recurring revenue and low customer concentration command the high end of these ranges.
| Industry | EBITDA Multiple | SDE Multiple | Key Value Drivers | Market Notes |
|---|---|---|---|---|
| Retail | 2.0–3.0x | 1.5–2.5x | Location, inventory turnover, loyal customer base | E-commerce pressure suppresses multiples for physical retail |
| Restaurant / Food Service | 1.5–2.5x | 1.5–2.5x | Location, lease terms, brand/franchise affiliation | Independent restaurants trade at low end; franchises higher |
| Manufacturing | 3.0–5.0x | 2.5–3.5x | Proprietary processes, customer contracts, equipment condition | Niche/specialty manufacturers command 5x+; commodity manufacturers 2–3x |
| Healthcare / Medical | 4.0–6.0x | 2.5–3.5x | Recurring patient base, insurance contracts, licensure | DSO and MSO roll-ups drive multiples higher in certain subsectors |
| Technology / Software | 4.0–8.0x | 2.5–4.0x | Recurring revenue (ARR), churn rate, IP ownership | SaaS with >80% gross margin can trade at 6–10x ARR |
| Professional Services | 2.0–4.0x | 2.0–3.5x | Client retention, staff quality, book of business transferability | CPA, legal, consulting firms face key-person concentration risk |
| Distribution / Logistics | 2.5–4.0x | 2.0–3.0x | Long-term supplier/customer contracts, fleet assets | Specialty distributors with exclusive territories trade at high end |
| Construction & Trades | 2.0–3.5x | 1.5–2.5x | Backlog, license transferability, equipment | Difficult to transfer; owner relationships are key risk |
| Franchise | 2.0–4.0x | 2.0–3.0x | Brand strength, territory exclusivity, franchise agreement terms | Resale subject to franchisor approval; validated by SBA Franchise Directory |
| Auto Services | 3.0–5.0x | 2.0–3.0x | Location, customer database, DealerRater reviews | Multi-unit auto dealers command premiums; single units more volatile |
| B2B Business Services | 3.5–6.0x | 2.5–3.5x | Recurring contracts, low churn, diversified customer base | Subscription and contract-based revenue drives highest multiples |
| E-commerce | 2.5–4.5x | 2.0–3.0x | Branded vs. arbitrage, supplier relationships, DTC vs. marketplace | Amazon-dependent businesses trade at discount; DTC brands at premium |
Source: BizBuySell market data, business broker transaction reports, SBA lender underwriting guidelines (2024–2025). For informational purposes only.
Many buyers and sellers confuse these three methods, leading to negotiation impasses or incorrect valuations. Here is a clear breakdown:
For most SBA-financed acquisitions, the SDE method is the most relevant — it tells both buyer and lender how much cash the business will generate after debt service. Our calculator shows all three simultaneously so you can triangulate a reasonable range and understand which method yields the most conservative vs. aggressive estimate for your negotiation.