M&A guide

    What is my business worth? SME valuation multiples explained

    A private business is not worth a fixed multiple simply because it operates in a particular sector. Buyers assess sustainable earnings, growth, customer concentration, management dependence and the terms of the deal. An earnings multiple is a starting point; debt, cash, working capital and due diligence change what the seller ultimately receives.

    Revenue is not profit

    Buyers rarely price a business on turnover. They look at earnings before interest, tax, depreciation and amortisation (EBITDA), or at owner earnings for smaller businesses where the owner is also the main manager.

    Normalising earnings

    Supported once-off costs can be added back, and the owner's pay is adjusted to a market-related replacement salary. Recurring expenses should not be added back simply to raise the figure; a buyer's due diligence will test every adjustment.

    Why the same EBITDA can attract different offers

    • Dependence on one or two customers
    • How much the business relies on the owner
    • Quality and consistency of financial records
    • Growth trend over the last three years
    • Contracts, licences and key staff that may not transfer easily

    Enterprise value versus what you receive

    The multiple produces an enterprise value. Debt is deducted, surplus cash is added and the price is adjusted against an agreed working-capital level to reach the equity value paid to the seller.

    Illustrative example (arithmetic only)Amount
    Maintainable EBITDAR2m
    Illustrative multiple4
    Enterprise valueR8m
    Less debtR1.5m
    Plus surplus cashR0.5m
    Equity value, before other adjustmentsR7m

    What a free calculator can and cannot tell you

    Our free valuation gives an indicative range based on the information you enter. It is not a formal valuation, a buyer offer or a document for tax purposes.

    Records to prepare before discussing a price

    • Three years of annual financial statements
    • Current management accounts
    • Customer and supplier concentration figures
    • Schedule of debt and other liabilities
    • List of key contracts and staff

    Common questions

    Is turnover enough to value a business?

    No. Buyers value sustainable earnings, then adjust for debt, cash, working capital and risk.

    Can I add my salary back?

    Your pay is replaced with a market-related salary for the role, so only the excess is added back.

    Is the valuation the amount I receive?

    Not necessarily. Debt, cash, working capital, tax and deal terms all affect your proceeds.

    Why does owner dependence reduce value?

    A buyer pays for earnings that continue after you leave. If the business relies on you, that continuity is less certain.

    Get an indicative range in minutes

    Use the free valuation, then tell us confidentially if you would like a realistic view of what buyers may pay.

    Related guides

    Last updated October 2026. This guide is general information on South African regulatory procedure and is not legal advice on your specific matter. Dynamic Legal Services (Pty) Ltd is a private legal advisory firm and is not a government department or regulator.