Business Valuation Services for $1M-$100M Owners
How much your business is worth, the methods behind the number, and what drives your multiple.
Business valuation is the process of estimating what your business would sell for in today's market. For a lower-middle-market owner it is the foundation of every decision that follows: when to sell, what to fix first, and what number to hold out for.
A business that knows its value negotiates from strength. A business that guesses negotiates from hope. This page explains how valuation works, the methods used, what drives your multiple, and how to get a defensible range for your own business.
Key takeaways
- Most lower-middle-market businesses are valued as a multiple of adjusted EBITDA, typically 4x to 8x in the $1M-$100M revenue band.
- Valuation uses three approaches: market (multiples), income (DCF), and asset-based. For a healthy business the market approach usually governs.
- The basis shifts with size: owner-operated businesses are valued on SDE, professionally managed businesses on adjusted EBITDA.
- Adjusted EBITDA is the correct base, not raw reported profit. Defensible add-backs raise the earnings the multiple is applied to.
- Strategic acquirers typically pay the highest multiples, PE firms pay market level, family offices value certainty, and search funds or individual buyers sit 10% to 20% below strategics.
Last updated: July 2026 · Reviewed by the FISART senior team
4-8x EBITDA
3 approaches
Adjusted EBITDA
2 minutes
What business valuation services actually do
Business valuation services estimate the price a willing buyer would pay for your business today, using a defensible method and current market data rather than a rule of thumb or a hopeful number. For a private company there is no ticker and no public price, so the value has to be built from the earnings, the risk, and what comparable businesses have actually sold for.
A good valuation does three things. It sets a realistic expectation before you go to market, so you neither underprice a strong business nor stall on an unrealistic one. It identifies the specific factors dragging or lifting your number, which become the work list before a sale. And it gives you a credible range to negotiate from, backed by method rather than opinion.
Valuation is not the same as price. Value is what the analysis says the business is worth; price is what a specific buyer pays after a competitive process and negotiation. The gap between the two is exactly what a structured sale is designed to close, which is covered on the sell your business hub.
The three business valuation approaches
Valuation professionals use three approaches, and for a healthy operating business the market and income approaches carry the most weight. Each looks at value from a different angle, and a sound valuation cross-checks them against each other rather than relying on one.
The market approach values your business against what comparable businesses have sold for, usually as a multiple of adjusted EBITDA or SDE. The income approach, most often a discounted cash flow, projects future cash flows and discounts them to present value. The asset approach values net assets and generally sets a floor.
| Approach | How it works | Best for |
|---|---|---|
| Market (multiples) | Adjusted EBITDA or SDE times a market multiple from comparable sales | Most healthy, profitable operating businesses |
| Income (DCF) | Projected cash flows discounted to present value | Predictable, contracted, or recurring-revenue businesses; a cross-check |
| Asset (net asset value) | Assets minus liabilities on a market basis | Asset-heavy, holding, or unprofitable businesses; sets a floor |
For most owners in the $1M-$100M range, the market approach sets the headline number and the income approach confirms it. For the multiples themselves, see business valuation multiples and the detailed EBITDA multiples by industry breakdown.
SDE vs EBITDA: which basis applies to your business
The earnings metric your business is priced on depends on its size and how it is run, and it changes the multiple you are compared against. Owner-operated businesses are valued on Seller's Discretionary Earnings (SDE); larger, professionally managed businesses are valued on adjusted EBITDA. Getting the basis right is the difference between an accurate valuation and a misleading one.
SDE is earnings before interest, taxes, depreciation, and amortization, with one full owner's salary and benefits added back. It reflects the total financial benefit to a single owner-operator. EBITDA adds back only a market-rate replacement for the owner, because an institutional or strategic buyer plans to hire management rather than run the business hands-on.
The crossover happens as a business grows past roughly $1M of adjusted earnings and develops a management team. Below that, buyers think in SDE multiples, usually in the low single digits. Above it, buyers think in EBITDA multiples, which run higher. Most businesses in the $1M-$100M revenue band are valued on adjusted EBITDA, and reducing owner dependence is often what moves a business from the SDE world into the higher EBITDA world.
Adjusted EBITDA: the single biggest lever on your sale price
Reported profit understates what a buyer is actually acquiring, because most owners run their business to minimize tax, not to maximize a sale price. Adjusted EBITDA corrects for that by adding back items that do not reflect the ongoing earning power of the business under new ownership. Each add-back must be defensible in diligence, because a buyer will test every one.
A thorough normalization can raise the earnings base by 20% to 40% before a single change is made to the business itself. That increase is then multiplied by the market multiple, so the effect on the final number is often six or seven figures. A weak or undocumented normalization costs sellers that same amount on the other side.
Typical add-back categories
- ·Above-market owner compensation normalized to a market-rate replacement
- ·Personal expenses run through the business (vehicles, travel, insurance)
- ·One-time costs (lawsuits, restructuring, a large client loss)
- ·Related-party transactions priced below or above market
- ·Deferred maintenance or excess capital spending ahead of a sale
- ·Non-operating assets (real estate, investments not tied to operations)
Clean, well-documented add-backs raise the earnings base the multiple is applied to, which is one of the highest-return preparation tasks before a sale. For the full view of how preparation lifts value, see exit planning.
Valuation in 2 minutes
What is your business worth in today's market?
Get an indicative range in two minutes with the FISART valuation calculator, reviewed by a senior advisor before you receive it. To see what you would keep after tax and structure, follow up with the net proceeds calculator.
What is my business worth? Typical ranges
Most lower-middle-market businesses in the $1M-$100M revenue band are worth 4x to 8x adjusted EBITDA, with the exact multiple set by size, growth, margins, recurring revenue, and owner dependence. Smaller, owner-reliant businesses sit toward the lower end; larger, faster-growing businesses with recurring revenue sit toward the top.
Two numbers produce the estimate: the earnings base and the multiple. A business earning $3M of adjusted EBITDA at a 5x multiple is worth about $15M of enterprise value; the same earnings at 7x is worth about $21M. The multiple is where most of the value is won or lost, and it is driven by the factors in the value-driver section below.
This page sketches the ranges rather than listing every industry. For the full picture, see business valuation multiples and EBITDA multiples by industry.
From enterprise value to what you keep
Enterprise value is not the amount that lands in your account. The equity bridge subtracts debt, adds excess cash and non-operating assets, and arrives at equity value. After that comes tax: the effective rate depends on deal structure (stock sale vs asset sale), entity type, and state. To convert a headline valuation into a realistic net number, use the net proceeds calculator.
What drives your business valuation
Five factors move your multiple more than any others: owner dependence, recurring revenue, customer concentration, growth, and margin quality. Two businesses with identical earnings can be valued a full turn or more apart on these alone, which is why they are the focus of exit preparation.
Owner dependence is the single largest discount. Recurring, contracted revenue is worth more per dollar than project revenue. Customer concentration works the other way, because the buyer inherits that risk. Consistent growth and clean margins push a business toward the top of its range.
The practical point is that valuation is not fixed. The same business, prepared over a focused period, can move up its own range before it ever goes to market. That is the premise of exit planning.
Key value drivers
- ·Owner dependence and management depth
- ·Recurring, contracted revenue as a share of total
- ·Customer concentration (no single customer above 20% of revenue)
- ·Revenue and EBITDA growth over the last three to five years
- ·Margin quality and consistency
- ·Clean, defensible add-backs
Who buys businesses and what they pay
Multiples are not a fixed number for your industry. They depend on who is buying. The four main buyer groups differ in what they pay, how they structure, and what they expect after closing. A structured process puts your business in front of all four, which is how sellers capture the competitive spread. For the full picture on running that process, see sell your business and what an M&A advisor does.
Strategic acquirers
Operating companies acquiring for growth, market share, or synergies. They typically pay the highest multiples because they can offset the purchase price against cost savings or revenue gains they expect to realize after closing.
Private equity firms
Financial buyers running buy-and-build or platform strategies. They pay market multiples with a premium for platform characteristics and expect clear growth levers over a four-to-seven-year hold period.
Family offices
Private capital with a long-term investment horizon. They often pay market-level multiples with high certainty of close. More patient capital, less pressure on short-term exits or aggressive restructuring.
Search funds and individual buyers
Entrepreneurs acquiring a single business to operate, often with investor backing. They typically pay 10% to 20% below strategic buyers but bring strong personal commitment and long-term alignment with the business.
How a professional valuation works
A senior-led valuation follows four structured phases from financial intake to a written report with a best, base, and worst case. The timeline below reflects a typical lower-middle-market engagement. For the full sale process that follows, see how to sell a business.
Financial intake
- ·Review of three to five years of financial statements
- ·Trailing-twelve-month P&L and balance sheet structuring
- ·Revenue quality and contract analysis
EBITDA normalization
- ·Identification of all add-back items
- ·Coordination with your CPA or controller
- ·Normalized earnings schedule with documentation
Comparable analysis and method selection
- ·Comparable transactions and public-company benchmarks
- ·Method selection (typically market multiples plus DCF as cross-check)
- ·Value-driver analysis against buyer expectations
Valuation range and report
- ·Best, base, and worst case with documented assumptions
- ·Written valuation report with methodology and sensitivity analysis
- ·Review with the owner and discussion of preparation levers
Preparation
Valuation is the starting point, not the finish line
A valuation tells you where your business stands today. The gap between your worst and best case is usually a small number of fixable value drivers. A focused three-month preparation lifts the base before you go to market, then feeds directly into a competitive sale process. Preparation and sale from the same team.
Three months, a clear action plan, and a measurable valuation uplift.
Learn about exit planningHow FISART values your business
FISART values your business through a senior-led analysis that combines the market and income approaches, benchmarks against current transaction evidence, and delivers a range rather than a single number. Every valuation is reviewed by a senior advisor, not produced by a tool alone, because the judgment on add-backs, comparables, and risk is where accuracy lives.
The output is a best, base, and worst case with the assumptions written down, so you can see what would have to be true for each. That range does two jobs: it sets a realistic expectation, and it turns into a work list, because the gap between your worst and best case is usually a small number of fixable value drivers. Where AI helps is in widening and sharpening the comparable evidence and buyer data behind the analysis. It adds reach and precision to the research. It does not replace the advisor's judgment.
A valuation is the first step, not the sale. Converting a defensible value into the highest achievable price is the job of a structured competitive process, which is where an M&A advisor and the sale process come in.
Common valuation mistakes
Five errors come up repeatedly in lower-middle-market valuations. Each one costs real money, and each one is avoidable with the right process.
- ·Using raw profit instead of adjusted EBITDA. Reported profit reflects tax-minimized earnings, not sale-ready earnings. A proper normalization often adds six or seven figures to the base the multiple is applied to.
- ·Relying on a single method. A multiple without a DCF cross-check, or the other way around, produces false precision. Sound valuations triangulate from more than one angle.
- ·Ignoring owner dependence. If the business cannot run without the owner, that risk compresses the multiple and narrows the buyer pool. Building management depth before a sale widens both.
- ·Working from stale numbers. A valuation older than six to twelve months may not reflect current earnings, market conditions, or interest rates. Roll it forward with each quarter.
- ·Confusing enterprise value with equity value. Enterprise value is the operating business before debt and cash. Equity value is what the owner keeps after the bridge. Negotiating on the wrong number leads to a painful surprise at closing.
Worked example: how the basis changes the number
The clearest way to see why the basis matters is to value the same business two ways. Consider an owner-operated business with $1.2M of SDE, of which $900K would remain as adjusted EBITDA after paying a market-rate manager. The figures below are illustrative guide values, not a promise of outcome.
| Basis | Earnings | Multiple | Indicative value |
|---|---|---|---|
| SDE (owner-operated view) | $1.2M | 3.0x | $3.6M |
| Adjusted EBITDA (managed view) | $0.9M | 5.5x | $5.0M |
The managed view produces a higher number here because a professionalized business earns a higher multiple, even on a lower earnings base. This is why reducing owner dependence before a sale is one of the most valuable things an owner can do. This example is for general information and does not replace individual advice. Actual multiples vary by sector, size, growth, and market conditions.
More on business valuation
Frequently asked questions
Direct answers on what your business is worth, SDE vs EBITDA, valuation methods, costs, and how to raise your number.
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