BizSugar.com › Finance › Valuation Multiples Definitions

The valuation multiple formulas available to compute the value of a business for sale are numerous and can be confusing to many small business owners. In fact, many professionals can be similarly confused by the various multiple formulas currently in use.

When pricing a business for sale, a valuation multiple is applied to either revenue and/or earnings and then often adjusted to account for assets and liabilities which may be transferred to the buyer when the business is sold. Additionally, every business buyer will apply adjustments to the value of a prospective acquisition based on a specific perception of risk as the new business owner as well as future opportunities.