How much does a business broker charge?

Business broker commissions range from 5–12% of the final sale price depending on deal size. Smaller businesses (under $1M) typically pay 10–12%, while mid-market businesses ($1M–$5M) pay 6–10%. Some brokers also charge an upfront retainer of $2,500–$15,000 for CIM preparation, which is usually credited back at closing.

How long does it take to sell a business?

Most small to mid-market business sales take 6–12 months from broker engagement to close. The stages include CIM preparation (4–8 weeks), buyer outreach and qualification (4–12 weeks), due diligence (30–90 days), and closing (2–4 weeks). SBA-financed deals add 30–60 days to the timeline.

What is seller's discretionary earnings (SDE)?

Seller's Discretionary Earnings (SDE) is the standard valuation metric for small businesses. It equals net profit plus owner salary, owner benefits, non-recurring expenses, and depreciation/amortization. SDE represents the total economic benefit to a single owner-operator. Most small businesses sell at 2–4× SDE.

Do I need a business broker to sell my business?

While you can technically sell without a broker, data consistently shows brokered transactions close at 15–25% higher prices and at higher completion rates than unrepresented sales. The exception is if you already have an identified buyer at an agreed price. In any other scenario, professional representation pays for itself many times over.

What is an IBBA-certified business broker?

The International Business Brokers Association (IBBA) is the professional body for business brokers. IBBA-certified brokers hold designations like CBI (Certified Business Intermediary) or M&AMI (Merger & Acquisition Master Intermediary), which require transaction history, continuing education, and adherence to a code of ethics. These certifications signal professional commitment and deal experience.

What is the difference between a business broker and an M&A advisor?

Business brokers typically handle Main Street and lower-middle-market transactions — businesses selling for $100K to $10M. M&A advisors operate in the middle market ($10M to $500M+) with larger teams, investment banking capabilities, and institutional buyer relationships. For businesses under $5M, a CBI-certified business broker is usually the right choice.

How to Value a Small Business

Before you list your business for sale, you need a realistic number — not a hopeful one. Most first-time sellers either overestimate what their business is worth or underestimate it, and both mistakes cost money. This guide walks you through the main valuation methods, what drives value up or down, and how to get a number you can actually defend to a buyer.

Why Valuation Matters Before You Talk to Anyone

A lot of sellers wait until they have a buyer interested before thinking seriously about price. That's backwards. If you don't know your number going in, you're negotiating blind. Buyers — especially those working with advisors — will come in with their own valuation, and if yours is wildly different, deals fall apart fast. Getting a solid valuation early also helps you spot weaknesses you can fix before going to market. A business that earns $200,000 a year might sell for anywhere from $300,000 to over $1,000,000 depending on how it's structured, how dependent it is on you personally, and what industry it's in. Understanding why that range exists is the first step to landing at the top of it.

The SDE Multiple: The Most Common Method for Small Businesses

For most small businesses — those generating under $5 million in annual revenue — buyers and brokers use a metric called Seller's Discretionary Earnings, or SDE. SDE starts with your net profit and adds back your own salary, personal expenses run through the business, depreciation, amortization, and any one-time costs. It represents the total financial benefit a full-time owner-operator would get from the business in a year. Once you have your SDE, you multiply it by a number — typically between 2x and 4x for small businesses, though some industries run higher or lower. A profitable landscaping company with $150,000 in SDE might sell for $300,000 to $450,000. A well-established software business with recurring revenue and the same SDE might command 4x or more.

›Start with net profit from your tax returns or P&L
›Add back your owner salary and any personal expenses
›Add back depreciation, amortization, and one-time costs
›The result is your SDE
›Multiply SDE by a market multiple (typically 2x–4x for small businesses)
›The multiple varies by industry, growth trend, and how transferable the business is

The EBITDA Multiple: Used When Revenue Gets Larger

Once a business earns more than roughly $1 million in annual profit, buyers shift from SDE to EBITDA — Earnings Before Interest, Taxes, Depreciation, and Amortization. Unlike SDE, EBITDA does not add back the owner's salary, because at this size the business is expected to have a management team that runs independently. EBITDA multiples for small-to-mid-sized businesses typically range from 3x to 6x, though businesses with strong recurring revenue, proprietary systems, or dominant market positions can exceed that. If your business generates $800,000 in EBITDA and sells at a 4x multiple, the enterprise value is $3.2 million. The key difference between SDE and EBITDA is not just math — it signals what kind of buyer you're likely to attract and how they'll structure the deal.

Asset-Based Valuation: When Earnings Aren't the Whole Story

Some businesses are valued primarily on what they own rather than what they earn. This is common in asset-heavy industries like manufacturing, trucking, construction, or any business where the physical equipment, real estate, or inventory represents most of the value. The asset-based approach adds up the fair market value of everything the business owns — equipment, vehicles, inventory, real estate — and subtracts outstanding liabilities. If a printing company owns $600,000 in equipment and carries $100,000 in debt, the asset value is $500,000. This method often produces a floor value rather than a ceiling. If the business also generates strong earnings, a buyer will typically pay more than the asset value alone. But if earnings are weak or inconsistent, asset value becomes the anchor for negotiations.

›List all tangible assets: equipment, vehicles, inventory, real estate
›Get current fair market value — not book value or replacement cost
›Subtract all outstanding business liabilities
›Compare the result to an earnings-based valuation
›Use the higher number as your starting point, with documentation to support it

Revenue Multiples: A Quick Estimate, Not a Final Answer

You'll sometimes see businesses valued as a simple multiple of annual revenue — for example, 0.5x or 1x gross sales. This method is fast and easy, which is why it gets used in casual conversations and online calculators. But it's also the least accurate for most small businesses because it ignores profitability entirely. A business doing $2 million in revenue but keeping only $50,000 in profit is worth far less than one doing $800,000 in revenue and keeping $300,000. Revenue multiples are most useful in industries where profit margins are predictable and consistent — like certain SaaS businesses, insurance agencies, or accounting practices. For most Main Street businesses, use revenue multiples only as a rough sanity check, not as your primary valuation method.

What Makes Your Multiple Higher or Lower

Two businesses in the same industry with identical SDE can sell at very different multiples. The difference comes down to risk and transferability. Buyers pay more for businesses that don't depend entirely on the owner, have documented processes, show consistent or growing revenue over three or more years, and have a diversified customer base. They pay less — or walk away — when one customer represents more than 30% of revenue, when the owner is the primary relationship holder, or when financials are messy and hard to verify. Other factors that push multiples up include long-term contracts, proprietary products or systems, trained staff who will stay post-sale, and a physical location with a favorable lease.

›Owner-independent operations increase value significantly
›Three or more years of consistent or growing earnings support a higher multiple
›Customer concentration above 30% in one account is a red flag for buyers
›Documented systems and trained staff reduce perceived risk
›A long-term, transferable lease adds value for location-dependent businesses
›Clean, well-organized financials make due diligence faster and smoother

Getting a Formal Valuation vs. a Broker Opinion of Value

There are two main ways to get a professional assessment of your business's worth. A formal business valuation is performed by a Certified Business Appraiser (CBA) or Accredited Senior Appraiser (ASA) and produces a detailed written report. These typically cost between $3,000 and $10,000 and are most useful when the sale involves legal proceedings, partnership disputes, or estate planning. For most sellers simply preparing to go to market, a Broker Opinion of Value (BOV) is sufficient. A qualified business broker will review your financials, assess your industry, and give you a realistic price range based on comparable sales. This is typically free or low-cost when you're working with a broker. If you're not sure which brokers in your area specialize in your industry, BizBrokerMatch.com can help you find ones with relevant transaction experience.

Common Valuation Mistakes That Cost Sellers Money

The most expensive mistake sellers make is pricing based on what they need rather than what the market will pay. Needing $800,000 to retire comfortably doesn't make your business worth $800,000. A close second is using a single year of unusually strong earnings — often a post-pandemic spike or a one-time contract — as the basis for valuation. Buyers will average three to five years of financials and adjust for anomalies. Sellers also frequently forget to account for working capital requirements, equipment that needs replacement soon, or lease terms that expire within a year of the sale. Each of these issues will come up in due diligence and will reduce the final price if they're not addressed upfront.

›Don't price based on personal financial needs — price based on earnings and comparables
›Avoid using a single strong year as your valuation anchor
›Disclose equipment age and condition — buyers will find out anyway
›Check your lease terms before listing — a short remaining lease hurts value
›Keep personal and business expenses clearly separated in your books

Frequently Asked Questions

What is the most common way to value a small business?

For most small businesses, the SDE multiple method is the standard. You calculate your Seller's Discretionary Earnings — net profit plus owner salary and add-backs — then multiply by a number that reflects your industry and risk profile. That multiple is typically between 2x and 4x for Main Street businesses, though it can go higher for businesses with strong recurring revenue or low owner dependency.

How do I calculate SDE for my business?

Start with your net profit from your most recent tax return or profit and loss statement. Then add back your owner's salary, any personal expenses you run through the business, depreciation, amortization, interest, and any one-time expenses that won't recur. The total is your SDE. Most buyers will want to see this calculation across the last two to three years, not just the most recent one.

Is my business worth more than one times revenue?

It depends entirely on your profit margins and industry. A business with thin margins — say, 5% to 10% net profit — is rarely worth more than 0.5x revenue. A business with strong margins of 25% or more might justify 1x revenue or higher. Revenue multiples are a rough shortcut. Earnings-based methods like SDE or EBITDA multiples give you a more accurate and defensible number when you're actually negotiating with a buyer.

Do I need a formal appraisal to sell my business?

In most cases, no. A formal appraisal from a certified appraiser is typically required for legal situations like divorce, estate settlements, or partnership buyouts. For a standard sale, a Broker Opinion of Value from an experienced business broker is usually sufficient. A good broker will review your financials and comparable sales to give you a realistic price range — and this is often provided at no charge as part of the listing process.

What hurts the value of a small business the most?

Owner dependency is the single biggest value killer. If the business can't run without you — if you hold all the key customer relationships, technical knowledge, or operational decisions — buyers will either offer less or walk away. Other major value reducers include customer concentration (one client making up more than 30% of revenue), declining revenue trends, messy or inconsistent financials, and lease terms that expire soon after the sale.

Ready to find your broker?

Use BizBrokerMatch.com to find a business broker with experience in your industry who can give you a realistic Broker Opinion of Value before you commit to a listing price.

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How to Value a Small Business Before You Sell