EBITDA Multiple Valuation Calculator

Enterprise value is not what the seller receives.

Enterprise value is not what the seller receives. Enterprise value is what the business is worth; equity value is what the seller receives.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

EBITDA

EBITDA multiple

Debt to be repaid

Cash in the business

Working capital adjustment

Valuation multiples vary widely with market conditions, buyer type and the quality of the business. These are planning estimates, a broker's valuation and a completed sale are different things again.

Equity value

$952,000

$990,000 enterprise value

Enterprise value$990,000

Less debt−$80,000

Plus cash$42,000

Working capital adjustment$0

Enterprise value is what the business is worth; equity value is what the seller receives. The gap is debt and cash, and the working capital adjustment: usually a normalised level of stock and receivables. Is the item most often disputed at completion.

How the EBITDA Multiple Valuation Calculator works

Enterprise value is what the business is worth; equity value is what the seller receives. The gap is debt and cash, and the working capital adjustment, a normalised level of stock and receivables; is the item most often disputed at completion.

Also known as: EBITDA multiple calculator · enterprise value from EBITDA · earnings multiple valuation

What EBITDA measures

Earnings before interest, tax, depreciation and amortisation strips out the effects of financing structure, tax position and historic capital spending, leaving a measure of operating performance.

It is the standard basis for valuing businesses above the owner-operator scale, because it describes what the operation earns regardless of how it was funded or who owns it.

The critical difference from SDE is that EBITDA does not add back the owner's compensation. It assumes the business pays a market rate for management, which is the correct assumption once the business is large enough to need one.

The gap between EBITDA and SDE

For an owner-operated business the two figures differ by the owner's compensation, and the gap can be substantial.

A business with £180,000 of SDE where the owner would need to be replaced by a manager on £55,000 has roughly £125,000 of EBITDA. At the same multiple that is a materially lower valuation.

This is why the crossover between the two measures matters when a business is growing. Businesses valued on SDE at £400,000 of earnings frequently find that buyers at the next size bracket use EBITDA instead, and the apparent step up in multiple is offset by a lower earnings figure.

Adjusted EBITDA, and where it becomes fiction

Adjusted EBITDA removes items the seller argues are non-recurring or non-operational, and the adjustments are as contested as SDE add-backs.

Defensible: genuine one-off legal costs, a restructuring, the cost of a project that has ended, and normalisation of an owner's above-market salary.

Not defensible, and frequently attempted: adjusting out marketing spend, adjusting out costs the buyer will certainly incur, and describing a recurring annual expense as exceptional because it varies. The phrase adjusted EBITDA has acquired a certain reputation for a reason, and the more adjustments a schedule contains the more sceptically all of them are read.

What EBITDA hides

It excludes capital expenditure, which for a business that has to keep replacing equipment is a real and recurring cash cost. A business with £200,000 of EBITDA and £80,000 of annual capital spend is not the same as one with no capital requirement.

It excludes working capital movements, which for a stock business are large. A growing retailer consumes cash to fund inventory, and EBITDA shows none of it.

It excludes interest and tax, both of which are real payments. Which is why buyers look at free cash flow alongside EBITDA, and why an EBITDA multiple applied to a working-capital-hungry business can overstate what the buyer is actually acquiring.

The multiples by size

Multiples rise with size, consistently and substantially. Small businesses transact at low single-digit multiples; larger ones at considerably more, for the same sector and growth rate.

The reasons are structural: larger businesses have less key-person risk, more diversified revenue, better systems, access to more buyers including financial ones, and they can support debt financing which expands the buyer pool.

Which creates an argument for growing before selling that is stronger than the profit increase alone suggests. A business doubling its EBITDA may more than double its value if the increase also moves it into a bracket where the multiple is higher, and that compounding is the single strongest financial argument for waiting.

Where to go next

The EBITDA Multiple Valuation question rarely arrives on its own. These are the ones that usually come with it:

Seller Discretionary Earnings Calculator — Add-backs are worth the multiple.
Revenue Multiple Valuation Calculator — It ignores margin entirely.
Ecommerce Business Valuation Calculator — The multiple is driven by durability, not size.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

What is the difference between enterprise and equity value?

Enterprise value is the business itself. Equity value subtracts debt and adds cash, giving what the shareholders actually receive.

What is a working capital adjustment?

A settlement at completion for stock and receivables above or below an agreed normal level. It prevents a seller from running down stock before a sale to extract cash.

What EBITDA multiple should I expect?

It varies enormously with size, sector and growth. Larger businesses attract higher multiples than small ones for the same earnings quality, which is why bolt-on acquisitions work.

Why do larger businesses get higher multiples?

Less key-person risk, better processes, more buyers able to transact, and access to different financing. The gap between a £200,000 and a £2m EBITDA business is often several turns.