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BUSINESS VALUATION TOOL
Business Valuation Calculator
How much is your business worth? Use our free calculator to get an instant estimate based on your industry, earnings, and five key business quality factors. Covers 24 industries active in the Dallas-Fort Worth market — from HVAC and dental practices to e-commerce and veterinary clinics. Two minutes, no email required.
This page is the hub for all NTBX valuation tools. Start with the general calculator below, then explore SDE multiples by industry or drill into any of our 12 industry-specific valuation pages for deeper context and tailored calculators.
NTBX CALCULATOR
Full business valuation calculator
Select your industry, enter your financials, and get an instant estimate with a factor-by-factor breakdown. All 24 industries in the NTBX database are available — each with its own SDE multiple range and scoring model.
How the calculator works
The NTBX valuation calculator uses the SDE multiple method — the standard approach for valuing owner-operated businesses. It takes your annual Owner Earnings (SDE), identifies the appropriate industry multiple range, then applies a five-factor scoring model to position you within that range. The result is a low, midpoint, and high estimate — plus a factor-by-factor breakdown showing what is expanding or compressing your multiple.
The five factors evaluated are: recurring revenue (how predictable is your cash flow), operating history (years in business), team depth (employee count and owner dependency), earnings quality (SDE-to-revenue margin), and market fit (geographic positioning within the DFW market). Each factor scores +1 (positive), 0 (neutral), or −1 (negative). The aggregate score determines your adjusted multiple within the industry range.
The business valuation formula
At its core, the small business valuation formula is straightforward. The complexity lies in determining the right multiple for your specific business.
Annual SDE × Industry Multiple = Business Value
ANNUAL SDE
Net income + owner salary + benefits + one-time expenses + depreciation + personal expenses. The total cash flow available to one owner-operator.
INDUSTRY MULTIPLE
A range specific to your industry (e.g., 2.8x–3.4x for HVAC), adjusted by five quality factors. Reflects risk, growth potential, and buyer demand.
BUSINESS VALUE
The indicated value of the operating business — excluding real estate, which is valued separately if owned. This is the starting point for buyer negotiations.
Example: A pest control company generates $235,000 in annual SDE. The pest control industry range is 3.0x–4.5x SDE. This operator scores well on recurring revenue (82% subscription), operating history (10 years), and team depth (6 technicians) — resulting in an adjusted multiple of 4.1x. The indicated business value is $235,000 × 4.1 = $963,500.
The same company with only 30% recurring revenue, 3 years of history, and 2 employees might score a 3.2x multiple — an indicated value of $752,000. That is a $211,500 difference driven entirely by business quality factors, not industry selection.
Three methods for valuing a business
While our calculator uses the SDE multiple method (the standard for small business transactions), understanding all three approaches gives you a more complete picture of your business's value.
SDE Multiple Method
90% OF OWNER-OPERATED SMALL BUSINESSES
Annual SDE × Industry Multiple = Business Value
The SDE multiple method is the standard approach for valuing businesses where the owner is the primary operator. It starts with Seller's Discretionary Earnings — the total financial benefit available to one owner — and multiplies by an industry-specific multiple that reflects risk, growth potential, and buyer demand. Our calculator uses this method with a five-factor scoring model to position you within your industry's range.
Example: A plumbing company with $350,000 in SDE and a 2.7x adjusted multiple has an indicated value of $945,000.
When to use: Use when the owner is actively involved in operations and annual revenue is under $5M. This covers HVAC, dental, restaurant, home services, hospitality, laundromat, gas station, car wash, and most other service businesses.
Revenue Multiple Method
INSURANCE AGENCIES, E-COMMERCE, SAAS BUSINESSES
Annual Revenue × Revenue Multiple = Business Value
The revenue multiple method values a business as a multiple of its top-line revenue rather than owner earnings. This approach is used when revenue quality, recurring nature, and growth trajectory are more meaningful than current profitability — particularly for businesses with thin margins but strong revenue durability. Insurance agencies are typically valued at 1.5x-3.0x annual commission revenue. E-commerce businesses use revenue multiples as a secondary reference alongside SDE.
Example: An insurance agency with $600,000 in annual commission revenue and a 2.2x multiple has an indicated value of $1,320,000.
When to use: Use when the business has strong recurring revenue, the owner's compensation is a small portion of total costs, or when industry convention uses revenue multiples (insurance, digital businesses, professional services).
Asset-Based Method
ASSET-HEAVY BUSINESSES, DISTRESSED OPERATIONS, LIQUIDATION
Fair Market Value of Assets − Liabilities = Business Value
The asset-based method calculates business value by summing the fair market value of all tangible assets (equipment, real estate, inventory, vehicles) and intangible assets (brand, customer lists, licenses), then subtracting liabilities. This approach is used as a floor value or when the business's assets are worth more than its cash flow stream would suggest — common in asset-heavy industries or when a business is underperforming but owns valuable real estate, equipment, or inventory.
Example: A laundromat with equipment worth $180,000, leasehold improvements worth $60,000, and no liabilities has an asset-based floor value of $240,000 — even if cash flow multiples suggest a lower number.
When to use: Use as a floor check for any business, as the primary method for businesses with significant hard assets relative to cash flow, or for distressed businesses where cash flow does not support an income-based valuation.
How to value a business: step-by-step guide
Whether you use our calculator or work with a professional appraiser, the business valuation process follows five core steps. Here is how to work through each one.
1
Calculate your SDE
Start with your most recent year's net income (from your tax return or P&L). Add back: owner salary and payroll taxes, owner benefits (health, retirement, vehicle), one-time expenses, interest, depreciation, and amortization. The result is your Seller's Discretionary Earnings — the total financial benefit available to one owner-operator. Use 2-3 years of financial history to identify trends and normalize for unusual years.
Pro tip: Document every add-back with supporting records. Buyers and their accountants will verify each one during due diligence. The most common add-backs are owner salary ($80K-$250K), health insurance ($10K-$30K), personal vehicle ($8K-$15K), and personal cell phone/travel ($3K-$8K).
2
Identify your industry multiple range
Every industry has a baseline multiple range that reflects structural characteristics: revenue predictability, capital intensity, customer transferability, licensing requirements, and competitive dynamics. Pest control (3.0x-4.5x) trades higher than landscaping (1.5x-2.5x) because subscription revenue is inherently more valuable to buyers than seasonal project work. Use our SDE multiples by industry reference to find your range, or select your industry in the calculator above.
Pro tip: If your business spans multiple categories (e.g., an HVAC company that also does plumbing), the primary revenue source determines the base multiple, but diversification can move you higher within the range.
3
Score your business quality factors
Within each industry range, five factors determine where you land: recurring revenue percentage (contracts, subscriptions, maintenance agreements), operating history (years in business), team depth (employee count and management layers), earnings quality (SDE margin and consistency), and market fit (DFW location and competitive positioning). Each factor scores positive, neutral, or negative — the total score determines your position between the low and high end of your range.
Pro tip: Be honest in your self-assessment. Overestimating your factors leads to disappointment when buyer offers come in lower. Underestimating them leaves value on the table. The calculator's factor breakdown helps you see exactly where you're strong and where you can improve.
4
Adjust for market conditions
SDE multiples are influenced by macro conditions: SBA lending availability and interest rates, buyer demand (active buyer pool size), local economic conditions, and industry-specific trends. In strong buyer markets like DFW — where multiple buyer types compete for quality deals — multiples tend to run at or above national medians. Rising interest rates can compress multiples by 0.2x-0.5x by increasing the buyer's cost of capital.
Pro tip: The best time to sell is when your business is performing well AND the buyer market is healthy. Don't wait for the "perfect" market — focus on building a business that commands a premium in any market.
5
Consider deal structure impact
The headline multiple is not the whole story — deal structure significantly impacts the seller's actual proceeds. Key structure elements include: seller financing (5-20% of deal value is common, often at 5-7% interest), earnout provisions (tying a portion of price to post-sale performance), non-compete agreements (3-5 years is standard in Texas), training and transition periods (30-90 days is typical), and the treatment of working capital (inventory, receivables, payables). A lower multiple with an all-cash, clean deal structure may net the seller more than a higher multiple with heavy earnouts and contingencies.
Pro tip: Negotiate deal structure and price simultaneously. A buyer offering 3.0x with 100% cash at close may be a better deal than a buyer offering 3.5x with a 25% earnout tied to revenue retention. Work with an advisor who understands structure trade-offs.
Five factors that determine your multiple
Regardless of industry, buyers in the DFW market consistently evaluate these five dimensions. The calculator scores each factor and shows you exactly where you stand.
Recurring Revenue
How much of your revenue is under contract, subscription, or recurring service agreement. Predictable cash flow is the single most important driver of buyer pricing.
+
70%+ recurring revenue under contract
−
Under 40% recurring, project-dependent
Operating History
Years the business has been established. A long track record demonstrates durability through economic cycles, management transitions, and competitive pressure.
+
10+ years of consistent operations
−
Under 4 years of operating history
Team Depth
Employee count, management layers, and owner dependency. Businesses that operate independently of the owner are worth significantly more.
+
12+ employees with defined roles and management
−
Under 5 employees, owner-dependent operations
Earnings Quality
SDE margin relative to revenue and consistency year over year. Strong, consistent margins give buyers confidence in future cash flow.
+
20%+ SDE-to-revenue margin, consistent 3-year trend
−
Under 10% margin, volatile or declining
Market Fit
Geographic location within the DFW market. Core DFW zip codes benefit from deeper buyer pools, higher deal velocity, and population-driven demand growth.
+
Core DFW metro (75xxx/76xxx zip codes)
−
Outside primary DFW market counties
Why DFW business valuations differ from national averages
The Dallas-Fort Worth metroplex is the fourth-largest metro in the United States and one of the most active small business acquisition markets in the country. Three structural factors push DFW business valuations above national medians.
Buyer depth. DFW attracts PE-backed search funds, independent sponsors, SBA-financed owner-operators, and strategic acquirers looking to expand existing platforms. This competition for quality deals tightens the spread between ask and close, particularly for businesses with strong recurring revenue and management depth.
Population growth. North Texas added over 170,000 residents in the most recent census year. That translates into sustained demand for services (HVAC, plumbing, dental, childcare, veterinary care), commercial activity (restaurants, retail, hospitality), and consumer spending that supports business valuations across virtually every industry.
Business-friendly environment. Texas's lack of state income tax, favorable regulatory framework, and strong infrastructure attract both business operators and buyers from higher-cost markets (California, New York, Illinois). Businesses in high-growth corridors like Frisco, McKinney, Celina, Prosper, and west Fort Worth often command premiums above the ranges shown in the calculator.
Industry-specific valuation pages
For deeper context, tailored calculators with industry-specific inputs, and detailed value driver analysis, explore the dedicated page for your industry. Each includes a custom calculator, real DFW examples, buyer landscape analysis, and comprehensive FAQs.
Dental practice valuation
3.5x–4.8x SDE. Patient retention, payer mix, provider diversity, and dental-specific calculator.
Restaurant valuation
1.5x–3.0x SDE. Lease terms, prime costs, liquor license, concept transferability, and calculator.
HVAC business valuation
2.8x–3.4x SDE. Service agreements, technician depth, fleet condition, dispatch systems, and calculator.
Plumbing business valuation
2.4x–3.1x SDE. Licensed plumber depth, recurring contracts, owner dependency, and calculator.
Insurance agency valuation
1.5x–3.0x revenue. Retention rate, book quality, carrier mix, and revenue-based calculator.
Laundromat valuation
2.5x–4.0x SDE. Equipment age, utility costs, payment technology, lease terms, and calculator.
Gas station valuation
2.5x–4.5x SDE. Fuel volume, inside sales, environmental compliance, real estate, and calculator.
Car wash valuation
3.0x–5.5x SDE. Wash type, membership penetration, equipment condition, real estate, and calculator.
E-commerce valuation
2.5x–4.5x SDE. Traffic quality, platform independence, subscription revenue, and dual calculator.
Home services valuation
1.5x–4.5x SDE. Electrical, roofing, pool, landscaping, cleaning, pest control — 6 trades.
Hospitality valuation
1.5x–5.0x SDE. Hotel, motel, bar, and nightclub segments with hospitality-specific calculator.
Specialty services valuation
1.5x–5.0x SDE. Funeral home, salon/spa, gym, daycare, and veterinary practice — 5 segments.
Quick reference: what moves your valuation
INCREASES BUSINESS VALUE
- High recurring revenue under contract or subscription
- Owner works fewer than 20 hours per week on operations
- Documented SOPs and management layer in place
- 10+ years of consistent operating history
- SDE margins above 20% of revenue
- Located in high-growth DFW corridors
- Diversified customer base (no client above 10%)
- Clean financials with verified add-backs
- Modern equipment/technology with maintenance records
- Favorable lease terms (7+ years remaining)
DECREASES BUSINESS VALUE
- Revenue concentrated in one-time projects
- Owner is the primary revenue generator
- No documented processes or training systems
- Under 4 years of operating history
- SDE margins below 10% of revenue
- Customer concentration above 25% in one account
- Pending litigation or regulatory issues
- Deferred maintenance on equipment or fleet
- Short lease with no renewal options
- Commingled personal and business finances
Frequently asked questions
Common questions about business valuation, the calculator, SDE multiples, and selling a business in the North Texas market.
How much is my business worth?
Your business is worth a multiple of its annual Seller's Discretionary Earnings (SDE) — the total financial benefit available to one owner-operator. In the DFW market, SDE multiples range from 1.2x for lower-valued segments (bakeries, small salons) to 5.5x for premium segments (express tunnel car washes, veterinary practices with multiple DVMs). The specific multiple depends on your industry, recurring revenue percentage, owner dependency, team depth, earnings quality, and geographic market. Use the calculator on this page for an instant estimate, or explore your industry page for detailed context on what drives your specific multiple.
What is SDE and how do I calculate it?
SDE (Seller's Discretionary Earnings) is the standard profitability metric used to value owner-operated businesses. Start with your net income from your most recent tax return or profit-and-loss statement. Then add back: the owner's salary and payroll taxes, owner's health insurance and retirement contributions, personal vehicle expenses, one-time or non-recurring expenses (lawsuits, moving costs, equipment write-offs), interest expense, depreciation and amortization, and any other personal expenses run through the business. The result is your SDE — the total cash flow a new owner-operator would have available. Most small businesses in the $500K-$5M revenue range use SDE as their primary valuation metric.
What is the difference between SDE and EBITDA?
SDE includes the owner's total compensation (salary, benefits, perks) added back to earnings, while EBITDA does not. SDE is the standard for owner-operated businesses under $5M in revenue where the buyer will replace the owner as the primary operator. EBITDA is used for larger businesses ($5M+ revenue) where the owner's role is already filled by a salaried management team and the buyer is acquiring a management-run enterprise. For 90%+ of small business transactions in the DFW market, SDE is the appropriate earnings metric. Our calculator uses SDE as the primary method.
What are the three main business valuation methods?
The three primary approaches are: (1) The SDE Multiple Method — multiplying annual owner earnings by an industry-specific multiple. This is the standard method for 90%+ of small business transactions and what our calculator uses. (2) The Revenue Multiple Method — multiplying annual revenue by a revenue-based multiple. Used primarily for insurance agencies, SaaS businesses, and e-commerce where revenue quality is more relevant than owner earnings. (3) The Asset-Based Method — calculating the net value of tangible and intangible assets. Used when a business has significant hard assets (real estate, equipment, inventory) or when the business is underperforming but owns valuable assets. Most businesses are best served by the SDE multiple approach, with asset value considered separately.
How accurate is a business valuation calculator?
Online calculators like ours provide a market-based estimate within a reasonable range — typically within 15-25% of what a formal valuation would produce. The calculator uses the same five-factor scoring model (recurring revenue, operating history, team depth, earnings quality, and market fit) used by brokers and appraisers. However, a calculator cannot account for intangible factors: customer concentration, pending litigation, lease quality, equipment condition, or the specific competitive dynamics in your sub-market. For transactions under $500K, the calculator estimate is often sufficient for initial planning. For transactions above $500K, a professional valuation ($2,500-$7,500) is recommended before going to market.
Why do multiples vary so much between industries?
Multiples reflect the risk and growth profile of each industry. Industries with high recurring revenue (pest control at 3.0x-4.5x, car wash memberships at 3.0x-5.5x) command higher multiples because cash flow is predictable. Industries with project-based revenue (roofing at 1.8x-2.8x), high owner dependency (salons at 1.5x-2.5x), or thin margins (bakeries at 1.2x-1.8x) trade lower because the buyer assumes more transition risk. The spread within an industry shows how much individual business quality matters — veterinary practices range from 3.0x (solo DVM, owner-dependent) to 5.0x (multi-DVM, corporate consolidator appeal), a difference of $400,000 on $200K SDE.
What determines where I fall within my industry's multiple range?
Five primary factors determine your position: (1) Recurring revenue percentage — how much revenue is under contract, subscription, or recurring service agreement. (2) Operating history — how many years the business has been established. (3) Team depth — how many employees, whether there is management in place, and how dependent the business is on the owner. (4) Earnings quality — your SDE margin relative to revenue and consistency over the past 3 years. (5) Market fit — whether you are located in a high-demand buyer market like core DFW. Scoring well across all five pushes you toward the high end. Scoring poorly on even one or two can pull you toward the low end.
How is the business valuation formula calculated?
The standard small business valuation formula is: Annual SDE × Industry Multiple = Indicated Business Value. For example, a plumbing company with $350,000 in SDE and a 2.8x multiple has an indicated value of $980,000. The industry multiple is then adjusted up or down based on business quality factors. Our calculator uses a five-factor scoring model that evaluates recurring revenue, operating history, team depth, earnings quality, and market fit — each scored as positive (+1), neutral (0), or negative (-1) — to position you within your industry's range. The adjusted multiple determines your specific estimate within the low-to-high range.
Do these valuations include real estate?
No. The calculator values the operating business only — cash flow, customer base, brand, equipment, and team. If your business owns real estate, that is typically valued separately using a commercial appraisal. The real estate can be included in the deal at fair market value, structured as a lease from seller to buyer, or sold as a separate transaction. Including real estate can add 30-50%+ to total deal value depending on the property. For businesses like gas stations, car washes, funeral homes, and daycare centers, real estate is a significant component that should be addressed early in the process.
Can I improve my multiple before selling?
Yes — and most owners can move meaningfully within their range in 12-18 months. The highest-leverage improvements are: increasing recurring revenue under contract (adds 0.3x-0.8x for most industries), reducing owner dependency by hiring a manager or service lead (adds 0.2x-0.5x), documenting standard operating procedures and training systems, cleaning up financials with clear add-backs and consistent reporting, and building a management layer that allows the business to operate without you. A plumbing company at the low end of a 2.4x-3.1x range that moves to midpoint on $300K SDE gains $105,000 in deal value. Our growth-before-exit guide details the specific playbook.
Are North Texas multiples different from national averages?
Yes. DFW typically sees multiples at or above national medians for service businesses. Three factors drive this: (1) Buyer depth — PE-backed search funds, independent sponsors, SBA-financed buyers, and strategic acquirers are all active in North Texas, creating competition for quality deals. (2) Population growth — 170,000+ new residents annually sustains demand across all service industries. (3) Business-friendly environment — Texas's regulatory framework, no state income tax, and strong infrastructure attract buyers from higher-cost markets. Businesses in high-growth corridors like Frisco, McKinney, Celina, and west Fort Worth often command premiums above the ranges shown.
What is the difference between an asset sale and a stock sale?
In an asset sale, the buyer purchases specific assets — equipment, customer lists, inventory, brand, and goodwill — but not the legal entity. In a stock sale, the buyer purchases the ownership shares of the company itself. Over 90% of small business transactions are asset sales because they give the buyer a cleaner structure, a stepped-up tax basis on acquired assets, and protection from the seller's unknown liabilities. The valuations on this page assume asset sale structure, which is standard for businesses under $5M in SDE. Stock sales are more common for larger transactions or when the entity holds licenses, contracts, or real estate that cannot be easily transferred.
How long does it take to sell a business?
The typical timeline from decision to close is 6-12 months. Preparation (cleaning financials, documenting operations, initial valuation) takes 1-3 months. Active marketing and buyer outreach takes 2-4 months. Due diligence, negotiation, and closing takes 2-4 months. Well-prepared businesses with clean financials, strong teams, and management in place sell faster. Businesses with owner dependency, incomplete records, or regulatory complexity take longer. Industry also matters — veterinary practices with corporate consolidator interest can close in 3-6 months, while niche businesses with narrow buyer pools may take 9-15 months.
Do I need a broker to sell my business?
Not always, but most owners benefit from professional representation for businesses valued above $500K. A qualified broker provides: accurate market-based valuation, access to a broader buyer network, confidentiality management (critical during the selling process), deal structuring expertise, and negotiation experience. Broker commissions typically run 8-12% for businesses under $1M and 6-10% for businesses between $1M-$5M, with rates negotiable based on deal complexity. For businesses under $500K, selling directly is feasible if you have basic deal experience. Our business brokers guide covers when professional help pays for itself and when it doesn't.
What financing options are available to buyers?
SBA 7(a) loans are the most common financing vehicle for small business acquisitions in the $250K-$5M range. SBA loans typically cover 80-90% of the purchase price at favorable terms (10-25 year amortization, prime + 2-3%). Conventional bank loans, seller financing (5-20% of deal value is common), and private equity are other options. The stronger your business fundamentals — clean financials, consistent cash flow, management depth, and a reasonable multiple — the easier it is for buyers to secure financing. Businesses that are difficult to finance (due to thin margins, owner dependency, or incomplete records) face a smaller buyer pool and lower offers.
Should I get a professional valuation before using this calculator?
Use the calculator first to establish a baseline range, then consider a professional valuation for businesses with $250K+ in SDE or when you are within 6-12 months of going to market. A professional valuation ($2,500-$7,500) provides a defensible opinion of value based on comparable transactions, detailed financial analysis, and industry benchmarks. It is particularly valuable when negotiating with sophisticated buyers, structuring seller financing, or when the business has complex factors (real estate, pre-need contracts, intellectual property) that a calculator cannot capture. For initial planning and exploration, the calculator provides a reliable starting point.
Related resources
Know your number — then decide what to do with it. These guides cover every stage from initial valuation through closing.
SDE multiples by industry
Compare current SDE multiples across 41 industries in the DFW market — with key drivers, spreads, and detailed guides.
Growth before exit
Not ready to sell? A 12-18 month framework to improve your multiple and maximize exit value.
Selling your business
The decision-stage guide: readiness assessment, preparation checklist, exit strategies, and the fork in the road.
Selling a business in Texas
The complete process guide from valuation through closing and post-sale transition.
Business brokers in Dallas
When brokers help, when they hurt, and what they charge in the DFW market.
DFW business markets
How valuations and buyer activity vary across the six major DFW city markets.
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