How is a private business valued?
Short answer
Most private businesses are valued as adjusted EBITDA times a multiple. The profit a buyer believes will continue is multiplied by a number that reflects risk and growth.
What to know
- Start with EBITDA, then add back one-time and owner-specific costs.
- The multiple rises with recurring revenue, a strong team and low customer concentration.
- Debt, cash and working capital adjust the final price you receive.
What to do next
- 1Pull 3 years of financial statements.
- 2List every expense a new owner would not have.
- 3Get an outside view of the multiple for your industry and size.
Last reviewed September 2026 by the Horizon team. General information, not legal, tax or financial advice.