Free Company Valuation

Think of a company valuation like pricing a used car. The same make and model trades in different ranges depending on mileage, condition, and who is buying. A dealership pays wholesale; a private buyer pays retail. Your business has the same dynamic — a financial buyer paying for cash flow values it differently than a strategic buyer paying for market share.

This tool runs three separate methods simultaneously. The revenue multiple method asks: what would someone pay for a business generating your revenue in your industry, assuming average profitability? The EBITDA multiple method asks: what is your actual profit stream worth to a buyer who wants to own a cash-generating asset? The asset-based floor asks: if the business stopped operating today, what would the net assets sell for? Sophisticated buyers triangulate all three and pay somewhere in the middle.

The gap between the low and high end of your range is intentional. It reflects the real spread of comparable transactions in your sector — not vagueness. Where you land within that range depends on factors this tool cannot see: customer concentration, management depth, recurring vs. project revenue, and whether you have a clean set of books. A business with $2.4M in ARR and 95% gross retention lands at the top of the SaaS range. The same revenue with three customers accounting for 80% of it lands at the bottom.

Use this estimate when you need a defensible number fast: an inbound acquisition enquiry, a pitch deck, a shareholder conversation, or a buy-sell agreement discussion. It is appropriate for businesses with $100K to $50M in revenue where you have at least one full year of trading history. It is also useful as a sanity check after receiving a formal valuation — if a broker's number is far outside this range, ask why.

Do not use this tool as the basis for signing a letter of intent, settling an estate, completing a divorce proceeding, or satisfying a court-ordered appraisal. Those situations require a certified business valuator (CBV in Canada, CVA or ABV in the US) using regulated methodologies. The difference is not nitpicking — a formal appraisal can reveal adjustments (add-backs, normalised earnings, working capital pegs) that move the number by 20% to 40% in either direction.

The tool is also less reliable for pre-revenue startups, holding companies, and businesses where the owner's personal income is deeply embedded in the financials without clean separation. In those cases, the revenue and EBITDA figures entered will not reflect what a buyer actually sees — and the estimate will overstate value.

Using last year's revenue when this year is much higher. The cause is convenience — most people have last year's tax return at hand. The consequence is a systematic undervaluation. If your revenue grew 40% this year, using trailing 12 months from your most recent full year understates your run rate. Sophisticated buyers and investors will use your current annualised run rate, not your filed accounts, when it flatters the deal.

Treating the high end of the range as the price. The range shows you what comparable businesses have sold for — it does not show what your business will sell for. The cause is anchoring: people read the high number first and set it as the target. The consequence is entering negotiations at a number a buyer immediately dismisses, damaging credibility early in the process. Start with the midpoint, defend it with specifics, and work upward from evidence.

Entering EBIT instead of EBITDA. This is specific to this tool. EBIT includes depreciation and amortisation, which reduces the number. Entering EBIT instead of EBITDA will make your earnings-based valuation appear lower than it is. The fix: take your operating profit and add back your depreciation and amortisation line from the P&L. If you cannot find it, ask your accountant for the D&A figure — it is always disclosed separately for a reason.

The revenue valuation is calculated as Annual Revenue x Industry Revenue Multiple, then adjusted for growth. For every 10 percentage points of growth above 15%, the tool adds 5% to the multiple, capped at a 40% uplift. Negative growth applies a proportional discount, capped at 30% reduction. This adjustment is conservative — in practice, high-growth companies can command multiples double the sector average.

The EBITDA valuation uses EBITDA x Industry EBITDA Multiple, with no growth adjustment applied. EBITDA multiples are inherently backward-looking — they price current earnings power. Growth assumptions belong to the revenue multiple. This is intentional: applying a growth adjustment to both methods would double-count momentum.

The asset floor is Total Assets minus Total Liabilities (net asset value). It represents the liquidation scenario — the minimum a buyer should pay if every asset were sold and every liability settled. It is a floor, not a ceiling. Businesses with strong intangibles (brand, customer relationships, software) are worth far more than their balance sheet. The floor matters most in asset-heavy industries like manufacturing and construction.

The multiples used here are enterprise value multiples, not equity value multiples. That distinction matters: if your business carries significant debt, the equity value (what you personally receive at closing) is lower than the enterprise value this tool outputs by the amount of net debt. A business valued at $4M with $800K in debt delivers $3.2M to the seller. Always subtract net debt from the enterprise value range when negotiating an equity sale.

Growth-adjusted revenue multiples break down at very high growth rates because the formula assumes growth is sustainable. A business growing at 80% year-over-year is almost certainly in an expansion phase that will not persist — applying a 40% multiple premium to already elevated revenue can produce a fantasy number. Buyers of high-growth businesses typically apply a forward revenue multiple (next 12 months projected) rather than trailing revenue, which this tool does not model. If you are in hyper-growth, discount the tool's top end and use your projected ARR instead of trailing revenue as the input.