Learning CenterStage 3 · StrategyGuide 21 of 22
Growth & Exit
What's My Business Worth?
Adjusted EBITDA × a multiple.
A buyer values your company in two steps: first they work out what it really earns in a year, then they multiply that by a number. This guide walks through both steps with one example company.
Step 1: find the true earnings (Adjusted EBITDA)
Example: $1.32M company, one yearNet Profit
The bottom line on the year's P&L.
$132,000
Depreciation
A non-cash expense, so it's added back.
$42,000
Interest & Taxes
Financing choices a buyer will make their own way.
$12,000
EBITDA
Earnings before interest, taxes, depreciation & amortization.
$186,000
Owner Pay Above Market
Owner takes $150K; a hired manager would cost $90K.
$60,000
One-Time Costs
Expenses that won't repeat, like a single legal bill.
$15,000
Personal Expenses
Owner's vehicle and phone run through the business.
$9,000
Adjusted EBITDA
What a buyer believes the business really earns.
$270,000
Step 2: apply a multiple, then subtract debt
What moves the multiple
Up: recurring revenue, clean monthly books, a team that runs without the owner, a well-kept fleet.
Down: owner does everything, one big customer, messy books, shrinking sales.
Every dollar is multiplied
At 4×, adding $10,000 of lasting annual profit adds about $40,000 of value. So does proving a $10,000 add-back with clean records.
*Before taxes and deal fees. Multiples shown are for illustration only; real multiples depend on size, market conditions and the buyer.
Try it with your own year
Starts with the example company's numbersFrom net profit to a value range
Type in one year from your P&L and your add-backs. See your Adjusted EBITDA and what it is worth at 3×, 4× and 5×.
Values to owner are before taxes and deal fees. Multiples shown are for illustration only; real multiples depend on size, market conditions and the buyer.
Free tool
Try it with your real numbers
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