Selling My Business Calculator

Most sellers fixate on the headline price — the multiple times earnings number that sounds impressive in a letter of intent. But what hits your bank account is a completely different figure. Federal capital gains tax, broker commissions, legal bills, and due diligence costs can consume 25 to 40 percent of the gross price before you see a dollar. The gap between gross and net is the number that actually changes your life.

This calculator works backward from what you need. You enter your earnings and a plausible multiple to get a gross price estimate. Then every deduction is applied in sequence: advisor fees come off the top as a percentage of gross, other fixed costs come off next, and capital gains tax is calculated on the gain above your cost basis. What remains is your estimated net proceeds — the number that either meets your goal or tells you the deal is not ready yet.

The multiple is the biggest lever in the entire calculation. Moving from 3x to 4x on $400,000 of earnings adds $400,000 to the gross price — but only about $280,000 to your net after a 15% tax rate and 5% advisor fee. Every fraction of a multiple you negotiate has a compounding effect that flows through every line of the calculation. That is why experienced sellers spend far more energy on multiple negotiation than on fee reduction.

Use this calculator when you have a realistic earnings number — either your trailing twelve months of EBITDA or a defensible owner earnings figure — and at least a rough sense of what multiple your industry commands. It is most useful for sense-checking a letter of intent before you engage legal counsel, or for setting a walk-away price before entering negotiations.

It is also the right tool when you are reverse-engineering: you know what you need to net, and you want to know what gross price or multiple that requires. Run the numbers at your target net proceeds, back out taxes and fees, and you have your minimum acceptable offer.

This calculator is not appropriate for businesses mid-earnout negotiation, deals with significant real estate or equipment asset components that carry separate depreciation recapture tax treatment, or situations involving installment sales where gains are spread across multiple tax years. It also does not account for state capital gains taxes, which can add 3 to 13 percent in high-tax states. If any of these apply, the net proceeds figure here is an overestimate and you should work with a tax advisor before drawing conclusions.

Using revenue instead of earnings as the base. Many owners confuse top-line revenue with EBITDA or owner earnings. Buyers buy earnings power, not revenue. A business with $2,000,000 in revenue but $150,000 in EBITDA is worth far less than one with $800,000 in revenue and $400,000 in EBITDA. Entering revenue into the earnings field will inflate your estimated sale price by a factor of 3 to 10 and produce a completely unrealistic net proceeds figure.

Forgetting owner add-backs. If you run personal expenses through the business — car payments, travel, a family member on payroll — those should be added back to EBITDA before applying a multiple. Buyers adjust for this in due diligence, but if you do not include legitimate add-backs yourself, you are undervaluing the business from the start. Common add-backs include owner salary above market rate, non-recurring legal or consulting fees, and personal benefits run through the company.

Ignoring deal structure. This calculator assumes a clean cash-at-close transaction. In practice, many deals include an earnout — where part of the price is paid only if future revenue targets are met — or seller financing, where you act as the lender. Both structures reduce the certain cash you receive at close and add risk. A $1,500,000 deal with a $500,000 earnout is not the same as $1,500,000 in cash, and should not be evaluated as if it were.

The gross sale price is simply earnings multiplied by the agreed multiple. From that gross price, the advisor fee is subtracted as a percentage: advisor fee amount equals gross price times (advisor fee percent divided by 100). Other fixed closing costs are then subtracted in full.

Capital gains tax is calculated on the taxable gain, not the gross price. Taxable gain equals gross price minus your adjusted cost basis, with a floor of zero — you cannot have a negative taxable gain for federal purposes. Tax owed equals taxable gain times your capital gains rate.

Net proceeds equals gross price minus tax owed minus total fees and costs. The goal gap is net proceeds minus your personal financial target. A positive gap is a surplus; a negative gap is a shortfall that tells you how much more multiple, earnings, or fee reduction you need to make the deal work.

The multiple this calculator accepts is a single point estimate, but in practice buyers apply different multiples to different earnings streams within the same business. Recurring contract revenue might be valued at 5x while project-based revenue in the same company is valued at 2x. If your business has mixed revenue quality, a blended multiple understates value for the recurring piece and overstates it for the transactional piece — and sophisticated buyers will disaggregate these in their offer.

The other hidden lever is the tax rate selection. Many sellers assume they will pay 15% because that is the standard long-term rate, but if the deal closes in a year when your other income is elevated — from a large distribution, real estate sale, or spouse's income — the 20% or 23.8% bracket may apply. Some sellers time their deals to close in January of a year when they plan to take no other large distributions, specifically to stay in the 15% bracket. The difference between 15% and 23.8% on a $2,000,000 gain is $176,000 in taxes.