Calculator
Business Valuation Calculator
Put in the profit and what the owner takes out. See the adjusted earnings, an indicative value range, how much of it is goodwill, and whether a buyer could borrow to pay it.
Your snapshot
Selling? A price buyers can borrow against sells to a bigger market. Buying? This is the test a lender runs first. Send us the numbers and we will tell you how a lender is likely to read them.
↓ See how it adds up ↓
Adjusted earnings
What the price is made of
Can a buyer fund it?
Earnings cover is the adjusted earnings divided by the annual loan repayments. Lenders want clear headroom, because tax and reinvestment also come out of those earnings. Below about 1.5× the servicing conversation gets harder, and vendor finance, a bigger deposit or a lower price usually has to close the gap.
Selling or buying, the number that matters is the one a lender will back. Bring us the last 3 years of financials and we will tell you where this price lands.
Enquire nowIndicative estimate only. Not a formal valuation, a credit quote, approval or advice. The multiple and interest rate are your assumptions. Values, deposits and lending terms depend on the full financials and the lender's assessment of the specific business.
Want these numbers checked? Send the result across and we'll tell you what a lender would make of it. No meeting required.
How small businesses are valued
Most small and medium businesses are valued as a multiple of adjusted earnings. Adjusted earnings start with net profit, add back what the owner takes out and any one off costs, then deduct a fair wage for someone to run it, because a buyer either pays a manager or pays themselves. The multiple reflects risk: recurring, transferable revenue and a business that runs without its owner earn more, while owner dependence, a few large customers or a short lease earn less. The price then splits into tangible assets and goodwill, and that split decides how much a lender will fund.
If you are selling, our guide to selling a business in WA covers the full process, and the small business CGT concessions page covers the tax on the gain. If you are buying, start with businesses for sale in Perth, then read how lenders treat the intangible part of a price on our goodwill finance page.
Who this calculator is for
Who uses it and what to change
| Owner thinking about selling | Use your last full year of profit and your real owner costs. Then check the earnings cover: if a buyer with a 30% deposit cannot service the loan, your buyer pool is small at that price. |
| Buyer looking at a listing | Put in the asking price's earnings and move the multiple until the value matches the asking price. That is the multiple you are being asked to pay. |
| Seller weighing vendor finance | Lower the buyer's deposit and watch the earnings cover. Vendor finance on part of the price is one way to keep the price and still make it fundable. |
| Business heavy with goodwill | Set plant and equipment to what is really included. The higher the goodwill share, the larger the deposit lenders usually expect. |
Frequently asked questions
How do you value a small business?
Most small and medium businesses are valued as a multiple of their adjusted earnings. Start with net profit, add back the owner's wages and super, one off costs and personal expenses run through the business, then deduct a fair market wage for someone to do the owner's job. Multiply that adjusted figure by a multiple that reflects risk: recurring, transferable revenue earns a higher multiple, and owner dependence or a short lease earns a lower one. This calculator does that arithmetic.
What multiple should I use?
There is no single correct multiple, and any figure quoted online without comparable sales behind it is a guess. The 2.5 times in this calculator is an example to start from, not a market rate. Use the range a licensed business broker gives you from recent sales in your industry, or a formal valuation from an accountant or valuer, and move the slider to see what each end of that range does to the value and to a buyer's borrowing.
Why does the calculator test whether a buyer can fund the price?
Because most buyers borrow, and a price no lender will support shrinks the buyer pool to cash buyers. As a guide, lenders fund business purchases against a deposit of 20% to 50% of the price, and they test whether the business's own earnings can service the loan. The earnings cover figure shows that test on your numbers. Below about 1.5 times, the servicing conversation gets harder and the structure, such as vendor finance, matters more.
Is this a formal business valuation?
No. It is an indicative estimate to help you think about price and funding. A formal valuation for a sale, a family law matter, tax or a lender is prepared by a qualified valuer or accountant using the full financials, comparable sales and the specific risks of the business.