What your business would sell for.
Industry data: Damodaran, NYU Stern, January 2026 · sale multiple: BizBuySell, Q2 2026. An estimate, not an appraisal.
Example: A restaurant with $1,200,000 of revenue, $150,000 of EBITDA and $60,000 of owner pay has SDE of $210,000: $567,000 at what small businesses sell for, and $748,535 capitalizing its after-tax cash flow at the 18.5% an owner-operator needs in this industry. The estimate is the middle, $657,768; after $100,000 of debt and $40,000 of cash the owner keeps about $597,768. Listed restaurant chains trade at 17.5× EBITDA, which would suggest $1,836,901 even after a 30% discount: that is why public multiples are not used for a business this size.
Value a business from its revenue and EBITDA four ways: what small businesses actually sell for, public-company multiples for your industry, and a capitalized cash flow at your industry’s required return, using NYU Stern’s January 2026 data for 94 industries.
Small businesses usually sell for a multiple of seller’s discretionary earnings (SDE): profit before interest, tax and depreciation, plus what the owner pays themselves. The U.S. average was 2.7× in Q2 2026 (BizBuySell Insight Report). Larger businesses are priced on EBITDA, at higher multiples.
Appraisers pick methods that fit the business. Under about $5 million of EBITDA, buyers are owner-operators paying multiples of SDE, and listed-company multiples would overstate the value several times, so they are shown but not counted. Larger businesses are priced on EBITDA, and then the SDE multiple is the one left out. The income approach is used at every size.
From Professor Aswath Damodaran’s datasets at NYU Stern (January 2026), which cover thousands of U.S. public companies in 94 industries: their margins, EV/EBITDA and EV/Sales multiples and betas.
A small private company cannot be sold in a day the way a share can, and it depends more on its owner. Studies of restricted stock and private sales put that discount at roughly 20% to 40%; 30% is the default here.
An owner with most of their wealth in one business carries all of its risk, not only the market part a diversified investor keeps. Damodaran’s total beta (market beta ÷ the industry’s correlation with the market) measures that, which is why an owner-operator’s required return is much higher than a fund’s.