How Much Can I Sell My Business For? Practical Guide

This article was originally written in March 2023  and has since been updated with new discoveries and research in January 2026.

If you’re asking how much can I sell my business for, you’re usually trying to make a decision, not win a trivia contest. Do you list now, or wait? Do you accept an offer or hold out? Do you reinvest or take chips off the table?

A professional valuation can provide an expert, accurate assessment of the value of your business, especially when the stakes are high.

The most useful answer is a defensible range, plus a clear view of what drives it. Once you can explain your number in plain English, you can negotiate with more confidence and avoid surprises between “offer accepted” and “money in the bank.”

To get there, you have to start with the same definition buyers use, because that definition shapes everything from the multiple you can credibly claim to the terms you will be asked to accept. This is where the valuation process comes in—a comprehensive method for determining the value of your business. That’s what we’ll unpack next.

What Fair Market Value Actually Means

Before you get into math, it helps to align on what buyers are doing on the other side of the table. Fair market value is what a rational buyer will pay for durable, transferable cash flow, not what you need it to be worth. Buyers are ultimately assessing your business's value based on its ability to generate future earnings and sustain operations.

In practice, a business valuation is a pricing conversation about risk. Clean books, repeatable operations, and a business that runs without you push the range up. 

Confusing records, fragile customer relationships, and unclear operations pull it down. If you’ve ever thought, “Selling my business, how much is it worth?” this is the gap you’re trying to close.

A helpful way to stay grounded is to separate the numbers buyers care about:

• Small business sale price: The headline figure in the offer.

• Net proceeds: What you deposit after adjustments, taxes, and fees.

• Enterprise value (total value): Total consideration, including any assumed debt.

That simple split keeps you focused on the result, not just the headline.

It's also important to understand the parties involved in the transaction, as each may have different priorities and perspectives on the business's value.

Preparing to Sell Your Business

Preparing to sell your business is about more than just deciding on a price, it’s about making your business as attractive as possible to potential buyers. Start by familiarizing yourself with the main business valuation methods, as each can highlight different strengths of your business. For small businesses, the seller’s discretionary earnings (SDE) method is often the go-to, since it reflects the total financial benefit an owner receives. If your business is larger or has stable, predictable cash flow, you might consider the discounted cash flow (DCF) method, which estimates your business’s value based on projected future cash flows, discounted to their present value. The revenue multiple method and EBITDA multiple method are also popular, especially for businesses with strong sales or earnings before interest, taxes, depreciation, and amortization.

By understanding these valuation methods and preparing your financials accordingly, you can present your business in the best possible light. This might mean cleaning up your books, documenting recurring revenue, or highlighting growth opportunities. The more prepared you are, the more likely you are to attract serious potential buyers and achieve a sale price that reflects your business’s true value.

A Fast Range Using SDE And Valuation Multiples

Most owners do not need a 40-page report to get oriented. You need a fast estimate you can sanity-check, but it's important to get an accurate estimate to ensure reliable decision-making before refining with real data and real conversations.

Start With Seller’s Discretionary Earnings

The quickest baseline uses seller’s discretionary earnings (SDE), also known as seller’s discretionary earnings. SDE is the economic benefit one full-time owner-operator receives from the business, and this method values the business based on the total financial benefit an owner derives from it.

A practical way to calculate SDE is:

1. Start with annual profits (net income).

2. Add back the owner's salary, discretionary spend, and one-time expenses you can document.

3. Subtract a market-rate replacement salary for the role you personally perform.

4. Consider operating expenses as a key component in determining SDE.

Annual profits are often used as a starting point for SDE calculations, but it’s important to adjust for the owner's salary and operating expenses to get an accurate figure.

This is where many ranges get inflated. If you add back your salary but ignore the cost of replacing you, you’re building a number buyers will eventually correct for in their diligence. A conservative SDE is easier to defend, and it protects momentum once you start talking to buyers.

If you want a guided walkthrough of the inputs and add-backs that typically hold up, use Baton’s resource on how to value a business.

Apply Multiples, Then Check the Market

Next, apply valuation multiples that reflect how buyers price similar opportunities. For many owner-operated companies, a reasonable starting band is 2x to 4x SDE, with the middle depending on industry, size, and risk.

This is where market comps matter. Comps are not “the best deal I saw online,” they’re the closest comparable sales of similar businesses you can find by category, size, and geography. Using a market-based valuation method, you compare the selling prices of similar businesses in the same market to determine appropriate profit or revenue multiples. This approach helps you assess your business's market valuation based on real-world data. The multiples used are business based, meaning they are determined by the type of business and its specific financial metrics. Your goal is not to cherry-pick the highest multiple; it’s to land in a range you can justify.

Deal Terms Decide What You Actually Take Home

Once you have a range, the next question is whether the structure turns into money you can actually use. This is the part most sellers underestimate because the offer price feels like “the number.”

In real life, deal terms determine what you actually pay (or give up) to get the deal closed, and how much risk you keep after closing. The structure of the payment in a deal also influences the multiple offered by buyers, so it's important to consider how the terms are set up.

Here are the big levers buyers and sellers negotiate:

• Seller financing: You carry a note, which can expand the buyer pool, but it also shifts risk back to you.

• Earnouts: You receive part of the price only if the business hits future targets, which can create ambiguity if the terms are sloppy.

• Working capital peg: Closing adjustments tied to a target level of working capital, which can swing proceeds by meaningful amounts.

• Broker fees: Often a major line item, especially if you’re using a traditional commission model.

Two offers with the same headline price can produce very different net proceeds, so you want to model the structure before you fall in love with the top-line number.  Other factors, such as taxes and fees, can also impact the final amount you receive. That single habit makes negotiations calmer because you can trade terms intelligently rather than reacting emotionally.

For a neutral, non-competitive overview of selling considerations, including what typically happens during a sales process, the SBA’s guidance is a solid baseline.

What Moves Your Multiple Up (or Down)

Once you understand the mechanics, the most valuable work is deciding what to improve. Key factors that influence your valuation multiple include business size, growth potential, profitability, and financial health. Larger businesses and mid-sized businesses often command higher multiples due to their stability and market share, while companies in the lower middle market may require specialized valuation approaches.

Buyers pay more for predictability and transferability, and discount anything that feels fragile. High profit margins and strong financial health (such as low total liabilities and consistent annual revenue or annual sales) can significantly improve your business worth. A business that relies heavily on a few key individuals or the owner may see its valuation decrease due to the associated risks, while a strong management team can make your business more attractive and lead to a higher multiple.

A diverse customer and supplier base reduces risk and increases business value, as low supplier concentration and a broad customer base ensure more predictable earnings. The industry in which your business operates and current favorable market conditions also play a major role in determining multiples, with businesses in growing industries or strong economic climates typically valued higher.

When determining business worth, both tangible assets (like equipment and property) and intangible assets (such as brand reputation and goodwill) are important, along with total assets and total liabilities. All these elements, combined with key financial metrics and market trends, help buyers assess the true value of your business.

The Risk Profile Buyers Price In

Three risk themes show up in almost every deal:

• Owner dependence: Business owners and small business owners should be aware that if they are the only salesperson, the only operator, and the only relationship-holder, buyers price that key-person risk. Businesses that are overly dependent on the business owner or a few key individuals tend to have lower valuations due to the increased risk for buyers.

• Concentration risk: If one customer, supplier, or channel dominates revenue, buyers discount the business because a single loss can change everything.

• Financial clarity: Buyers pay for confidence, and confusion is expensive.

Addressing these does not require a reinvention. It requires removing friction and uncertainty.

The Growth Story Buyers Will Believe

Buyers pay for upside when it’s specific. The strongest growth levers are the ones you can show, not the ones you can imagine, such as a documented pipeline, pricing tests, margin improvements, or geographic expansion you have not pursued yet.

If your goal is to increase the value of your business in the next 6 to 12 months, focus on improvements that reduce perceived risk and make the business easier to run without you. Improving operational efficiency is a proven way to increase the value of your business before selling. That’s how you earn higher multiples without pretending the business is something it isn’t.

Why Clean Financials Speed Diligence

The underrated win is packaging. Standardized financials for faster diligence are not a slogan; it’s a practical advantage. Clean month-end closes, clear add-backs, and organized documentation reduce renegotiations and keep buyers from “re-trading” the price late in the process. It’s also important to ensure that all financial statements and reports reflect present day values, so buyers have accurate, up-to-date information when evaluating your business.

It also helps you attract pre-qualified buyers, because serious buyers move faster when they trust the data. Less back-and-forth means fewer stalled deals, and typically better outcomes.

Management Team and Business Dependence

A business’s value is closely tied to its management team and how much the business depends on specific individuals. Potential buyers are often wary of businesses that rely heavily on the owner or a few key employees, as this creates risk if those people leave after the sale. On the other hand, a strong, well-documented management team signals stability and makes the business more appealing.

To reduce business dependence, consider building a robust organizational structure where responsibilities are shared and critical processes are documented. Cross-training employees and delegating key tasks can also help distribute knowledge and skills across your team. By demonstrating that your business can operate smoothly without you or any single person, you’ll increase its value and make it more attractive to a wider pool of potential buyers.

A Simple Net Proceeds Worksheet You Can Reuse

To keep decisions clear, run every scenario through the same model. You’re not trying to forecast perfectly; you’re trying to avoid blind spots.

Simple Net Proceeds Worksheet

• Headline price: $2,000,000

• Cash at close: 80%

• Seller financing: 10%

• Earnouts: 10%

• Working capital peg adjustment: 5% swing (up or down)

• Broker fees: Varies by route

• Estimated taxes: Varies by structure

Taxes are the easiest place to get surprised, especially when allocation and structure shift the bill. For high-level context on how asset sales are treated, the IRS’s guidance on dispositions is a useful reference point.

If your sale includes an asset purchase with allocation, the IRS instructions for Form 8594 can help you understand what gets reported and why.

None of this replaces professional advice, but it makes your conversations with a CPA or attorney far more productive.

Common Valuation Mistakes

Valuing a business is as much an art as it is a science, and common mistakes can lead to misleading results. One frequent error is focusing on just one valuation method, like the times revenue method, without considering others such as the asset-based approach or the income-based approach. This can give an incomplete picture of your business’s worth.

Another pitfall is overlooking important factors like current market trends, your business’s growth potential, and any competitive advantages you hold. Failing to adjust for one-time expenses or non-recurring revenues can also skew your numbers. To avoid these mistakes, it’s wise to work with a professional business broker or valuation expert who can apply multiple valuation methods and account for all relevant factors. This comprehensive approach helps ensure you arrive at a reasonable valuation that stands up to scrutiny from buyers and their advisors.

Business Sale Process

Selling your business is a multi-step journey that requires careful planning and execution. The process typically begins with preparation—organizing your financial records, assessing your business’s strengths and weaknesses, and identifying potential buyers. Next comes business valuation, where you or your advisor will use methods like the discounted cash flow method, EBITDA multiple method, or revenue multiple method to determine your business’s worth.

Once you have a valuation, your business is marketed to potential buyers, which may include strategic buyers, private equity firms, or individual investors. This stage often involves creating a confidential information memorandum (CIM) and reaching out to a targeted list of buyers. After receiving and reviewing offers, you’ll negotiate terms such as price, payment structure, and any contingencies.

The final step is closing the sale, which includes transferring ownership, completing legal documentation, and ensuring all conditions are met. Throughout the process, working with a business broker or M&A advisor can provide invaluable support, helping you navigate each stage, avoid common pitfalls, and ultimately achieve a successful and profitable sale.

Turn a Range Into a Confident Next Step

The real goal is not to find a magic number. It’s to find a range you can defend, then shape the process so you keep more of it.

Start with SDE, apply realistic multiples, sanity-check with comps, then pressure-test the deal structure. If you want a fast baseline tied to market behavior, begin with a free business valuation using our calculator and use that output to model terms and timelines.