Estimate your company's worth using three proven valuation approaches — Asset-Based, Market Multiple, and Discounted Cash Flow (DCF). Visualize the results with interactive charts and get a comprehensive valuation summary.
Business valuation is the process of determining the economic worth of a company or enterprise. It plays a critical role in mergers & acquisitions, investment decisions, financial reporting, taxation, and strategic planning. A robust valuation synthesizes a company's financial performance, market position, growth prospects, and risk profile into a single monetary estimate.
Enterprise Value = Equity Value + Net Debt
The fundamental equation underlying all valuation approaches.
This calculator implements three cornerstone valuation methodologies:
Formula: Equity Value = Total Assets – Total Liabilities
This method calculates the net book value of the company's equity. It is a conservative estimate that does not account for future earnings potential or intangible assets like brand value, intellectual property, or customer relationships. However, it provides a solid "floor" valuation, especially for asset-heavy businesses.
Formulas:
P/E Method = Net Profit × Industry P/E Multiple
EV/EBITDA Method = EBITDA × Industry EV/EBITDA Multiple
The market approach relies on the principle of substitution — a rational buyer would pay no more for a company than the cost of acquiring a comparable substitute. Multiples are derived from publicly traded peers or recent M&A transactions. The P/E multiple is widely used for profitable companies, while EV/EBITDA is preferred for capital-intensive or high-growth firms because it is less affected by depreciation and financing decisions.
Simplified Formula: DCF = EBITDA × (1 + g) / (r – g)
where g = revenue growth rate and r = discount rate (WACC).
This is a simplified Gordon Growth model applied to EBITDA. In practice, a full DCF involves forecasting detailed cash flows for 5–10 years plus a terminal value. Our calculator uses the perpetuity growth model to provide a quick, transparent estimate. The DCF method captures the time value of money and incorporates company-specific risk through the discount rate.
To synthesize the three approaches, we compute a weighted average with the following weights (customizable in advanced settings):
This blended estimate provides a balanced view that mitigates the weaknesses of any single method.
| Scenario | Revenue | EBITDA | Asset-Based | Market (P/E) | Market (EV/EBITDA) | DCF | Weighted Avg |
|---|---|---|---|---|---|---|---|
| Tech Startup | $2.5M | $680K | $1.03M | $7.77M | $8.16M | $7.08M | $6.63M |
| Manufacturing SME | $8.0M | $1.4M | $3.20M | $6.00M | $11.20M | $9.33M | $7.87M |
| Retail Chain | $12.0M | $1.8M | $4.50M | $9.00M | $12.60M | $10.80M | $9.57M |
| Service Firm | $3.5M | $0.9M | $0.70M | $6.30M | $8.10M | $6.43M | $5.84M |
A private equity firm evaluates a B2B software company with $4.2M revenue, $1.1M EBITDA, and $2.3M net assets. Using our calculator with a 15% growth rate, 11% discount rate, industry P/E of 22x, and EV/EBITDA of 14x, the weighted average valuation is $14.8M. The range spans from $4.1M (asset-based) to $17.2M (DCF). The firm uses this range to negotiate a purchase price of $13.5M, representing a 9% discount to the weighted average — a reasonable entry point given market conditions.
Multiples are ratios that compare a company's value to a financial metric. They are derived from comparable companies and reflect market sentiment, industry dynamics, and growth expectations. The P/E multiple is influenced by earnings quality, growth rate, and risk. The EV/EBITDA multiple is less sensitive to capital structure and is widely used in M&A. Selecting the right multiple is an art: a high-growth tech company might trade at 30x P/E, while a mature manufacturing firm might trade at 12x. Always use industry-specific benchmarks.
For detailed multiples data, refer to resources like Damodaran's data or industry reports from Business Valuation Resources.