How Much Is My Business Worth? A Founder's Honest Guide

How much is my business worth? For most founder-led $3M–$15M companies, the honest answer is a range — usually 3x–6x adjusted EBITDA or 0.4x–1.2x revenue, depending on industry, growth, margins, and how dependent the business is on the owner. The number that matters isn't a single point estimate. It's the gap between what you'd get today and what you'd get after fixing two or three things.

The honest 60-second answer

Take your trailing-twelve-month EBITDA. Normalize it for one-time items and owner perks (more on that below). Multiply by 3x–6x. That is the range a strategic or financial buyer is likely to start at — before they discount for risk or pay up for quality.

If you're under roughly $5M of revenue and the owner runs everything, buyers will likely use SDE (Seller's Discretionary Earnings) and a lower multiple — typically 2x–3.5x. If you have a real management team and clean reporting, you're in EBITDA territory at the higher end.

What "adjusted EBITDA" actually means

Buyers don't take the EBITDA line from your tax return. They normalize it. That usually adds back things like:

• Owner compensation above market rate
• One-time legal, consulting, or technology spend
• Personal vehicles, travel, or family payroll
• Rent paid to an owner-controlled entity above market

And usually subtracts:

• Below-market owner comp (a buyer has to hire a real GM)
• Deferred maintenance and capex you've been skipping
• Revenue from a customer that's already telling you they're leaving

The five drivers that move your multiple

1. Owner dependence

If the business doesn't run for two weeks without you, a buyer underwrites that risk with a lower multiple — or with an earn-out that keeps you locked in for three years. The fix isn't dramatic: documented processes, a real #2, and a management cadence the business can run without you in the room.

2. Customer concentration

Once a single customer is more than ~20% of revenue, buyers start discounting. Above ~35%, lenders start requiring guarantees and earn-outs. Diversification almost always pays for itself in multiple lift.

3. Recurring vs. project revenue

Contracted, recurring revenue trades at a meaningful premium to project work. Even reframing existing relationships as multi-year service agreements can move the number.

4. Gross margin trend

Buyers care about direction as much as level. A 32% gross margin trending up is worth more than a 38% margin trending down. Pricing discipline and SKU pruning before a sale are some of the highest-ROI moves an owner can make.

5. Reporting and earnings quality

Cash-basis books, no monthly close, and a single bookkeeper hand-keying journal entries will cost you in diligence — sometimes several hundred thousand dollars in re-traded purchase price. A clean monthly close on accrual basis is table stakes above ~$5M revenue.

What to do with this

Most owners we work with don't actually want a number — they want to know whether they should sell now, fix a few things first, or grow another two years. The right next step is usually a value-driver diagnostic that tells you which two or three moves will most lift the number before you take it to market.