# What is my business worth? How business valuation works

> How to value a business: the income, market and asset methods, SDE vs EBITDA, multiples by size and industry, and the data line most valuations miss.

Canonical: https://origindatapartners.com/guides/what-is-my-business-worth
By: Origin Data Partners
Status: Published
Published: 2026-11-05
Updated: 2026-11-05
Sources checked: 2026-11-05

## Quick answer

A business is valued three ways: the income approach (expected earnings, adjusted for risk), the market approach (what similar businesses sold for) and the asset approach (assets minus liabilities). Small owner-run businesses usually sell for a multiple of seller's discretionary earnings (SDE), larger ones for a multiple of adjusted EBITDA. An industry survey for the second quarter of 2026, reported by SCORE, put the multiples at 2.0 to 3.1 times SDE for deals under $2 million and 4.0 to 5.8 times EBITDA for deals of $2 million to $50 million. What a valuation rarely shows is the separate licensing value of the company's operational records, such as support tickets, email and chat archives and code, which AI developers now pay for. Get two numbers: an accredited valuator for the business, and a records valuation for the data. Origin values the records only, not the business.

## Key points

- Most small businesses sell on a multiple of SDE; larger ones on adjusted EBITDA, at a higher multiple of a smaller figure.
- Valuations count records only through the earnings they help produce, so their licensing value is usually missing.
- Get two numbers before you sign or cancel anything: an accredited valuator for the business, a records valuation for the data.

## How much is my business worth?

Before you put a price on the business, check what its records are worth on their own. AI developers now pay for the operational records companies already keep, such as support tickets, work orders, email and chat archives and code ([public deals](https://origindatapartners.com/guides/ai-data-licensing-deals)). A [free valuation](https://origindatapartners.com/check-fit) takes six questions about the business and no files.

For the business itself, the standard is fair market value: the price at which it would change hands between a willing buyer and a willing seller, neither under any compulsion and both with reasonable knowledge of the facts ([Revenue Ruling 59-60](https://www.appraisers.org/docs/default-source/6.-publications/vab6/ch-34-revenue-ruling-59-60.pdf)). Valuers estimate it three ways. The [IRS valuation guidelines](https://www.irs.gov/irm/part4/irm_04-048-004) name the asset-based, market and income approaches as the three generally accepted approaches and say all three should be considered, and the [SBA](https://www.sba.gov/business-guide/manage-your-business/close-or-sell-your-business) gives sellers the same three.

| Approach | How it works | What you need |
| --- | --- | --- |
| Income | Projects revenue and earnings and accounts for the risk that they will not arrive. The appraiser picks a discount rate, capitalization rate or multiple to match the earnings measure. | Several years of financial statements, year-to-date results, projections and a list of one-time and discretionary expenses |
| Market | Compares the business with similar businesses that recently sold, usually as a multiple of SDE or EBITDA | Your adjusted earnings and sale data for businesses of similar size and industry |
| Asset | Subtracts total liabilities from the value of all assets, tangible and intangible | A balance sheet and values for property, equipment, inventory and intangible assets |

Source: [SBA: Close or sell your business (valuation methods)](https://www.sba.gov/business-guide/manage-your-business/close-or-sell-your-business)

## Business valuation methods: which one buyers use

For a sale, the most common method is a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization). For a small to medium-sized business the multiple could range between three and six times, depending on market conditions, according to [BDC](https://www.bdc.ca/en/articles-tools/start-buy-business/buy-business/how-value-business-youd-like-acquire), Canada's business development bank. A professional valuator then checks that figure against the value of the tangible and intangible assets and against what comparable businesses sold for. A business can also be worth more in pieces than as a whole, for example when it owns real estate.

The income approach is the most technical. Under the [IRS guidelines](https://www.irs.gov/irm/part4/irm_04-048-004), the appraiser chooses a benefit stream, such as pre-tax or after-tax income or cash flow, and a discount rate, capitalization rate or multiple consistent with it, after weighing the nature of the business, its risk, its industry and how stable its earnings are. When each future year is projected and discounted back, the method is usually called discounted cash flow.

The asset approach starts from the balance sheet. The [SBA](https://www.sba.gov/business-guide/manage-your-business/close-or-sell-your-business) tells sellers to value all property and real estate tied to the business, including intangible assets such as brand presence, intellectual property, customer information and projections of future revenue.

Source: [BDC: How to value a business you would like to acquire (July 2025)](https://www.bdc.ca/en/articles-tools/start-buy-business/buy-business/how-value-business-youd-like-acquire)

## What affects what a business is worth

The multiple moves with more than earnings. [BDC](https://www.bdc.ca/en/articles-tools/start-buy-business/buy-business/how-value-business-youd-like-acquire) names goodwill, intellectual property and location, and notes that strategic fit and competition between buyers can change the final price. A buyer's bank values the business too before lending, and banks tend to use more conservative assumptions.

The IRS's long-standing guidance for valuing private companies, [Revenue Ruling 59-60](https://www.appraisers.org/docs/default-source/6.-publications/vab6/ch-34-revenue-ruling-59-60.pdf), lists eight factors that are fundamental and require careful analysis in each case:

- The nature of the business and its history since it started.
- The economic outlook in general, and the condition and outlook of its industry.
- The book value of the stock and the financial condition of the business.
- Its earnings capacity.
- Its dividend-paying capacity.
- Whether it has goodwill or other intangible value.
- Past sales of the stock and the size of the block being valued.
- The market prices of listed companies in the same or a similar line of business.

Source: [Revenue Ruling 59-60, via the American Society of Appraisers](https://www.appraisers.org/docs/default-source/6.-publications/vab6/ch-34-revenue-ruling-59-60.pdf)

## SDE vs EBITDA: which earnings figure is used

Smaller owner-run businesses are usually valued on seller's discretionary earnings (SDE), and larger businesses with management in place on adjusted EBITDA, [SCORE](https://www.score.org/articles/ebitda-vs-sde/) explains. The difference is how the owner's pay is treated.

The gap can be large. In SCORE's illustration, the same business shows $200,000 of SDE but $150,000 of adjusted EBITDA, because a $50,000 market-rate supervisor salary replaces the owner's daily work. When two owners work in the business, buyers typically add back only one owner's pay. Keep an add-back schedule for the past three years, with the amount, reason and supporting document for each item, and make sure the totals tie back to your tax returns.

|  | SDE | Adjusted EBITDA |
| --- | --- | --- |
| Starts from | Pretax net profit | Net income |
| Adds back | One owner's salary and benefits, interest, depreciation and amortization, and personal or one-time expenses | Interest, taxes, depreciation and amortization, plus one-time and personal costs |
| Owner pay | One full-time owner's pay is added back | Replaced with a market-rate salary for the role the owner fills |
| Shows | The total financial benefit to one full-time owner-operator | What the business earns after paying for the management it needs |
| Typically used for | Smaller businesses where the owner works full time | Larger businesses with a management team |

Source: [SCORE: EBITDA and SDE, the earnings metrics that drive small business valuations (Oct 2026)](https://www.score.org/articles/ebitda-vs-sde/)

## Business valuation multiples by deal size

Multiples tend to rise with size, because larger businesses usually depend less on one person and draw more buyers, and they also vary by industry and risk ([SCORE](https://www.score.org/articles/ebitda-vs-sde/)). SCORE reports these multiples from the Market Pulse survey for the second quarter of 2026, which measures deals under $2 million on SDE and deals of $2 million to $50 million on EBITDA.

A business valuation calculator does the same arithmetic: an earnings figure times a multiple. A business with $300,000 of SDE at 2.8 times, for example, comes out at $840,000. Treat that as a starting point. A calculator cannot see your add-backs, your assets or how much the business depends on you, and an EBITDA multiple applied to SDE, or the reverse, gives the wrong answer.

| Deal size | Earnings measure | Reported multiple |
| --- | --- | --- |
| Under $500,000 | SDE | 2.0 |
| $500,000 to $1 million | SDE | 2.8 |
| $1 million to $2 million | SDE | 3.1 |
| $2 million to $5 million | EBITDA | 4.0 |
| $5 million to $50 million | EBITDA | 5.8 |

Source: [SCORE: EBITDA and SDE, the earnings metrics that drive small business valuations (Oct 2026)](https://www.score.org/articles/ebitda-vs-sde/)

## Valuation multiples by industry

Industry multiples are easiest to compare for listed companies. The figures below are enterprise value to EBITDA for US listed companies with positive EBITDA, from [NYU Stern's January 2026 data](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/vebitda.html). They show how industries compare with each other, not what a private small business will fetch: listed companies are far larger, and BDC's range for small and mid-sized businesses is three to six times EBITDA.

| Industry | Listed US companies | EV/EBITDA |
| --- | --- | --- |
| Software (system and application) | 309 | 24.48 |
| Restaurants and dining | 64 | 17.49 |
| Engineering and construction | 48 | 17.18 |
| Business and consumer services | 155 | 14.26 |
| Computer services | 64 | 14.10 |
| Healthcare support services | 104 | 11.17 |
| Trucking | 26 | 10.41 |
| All listed companies, excluding financials | 4,822 | 16.95 |

Source: [NYU Stern (Aswath Damodaran): enterprise value multiples by sector, US, January 2026](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/vebitda.html)

## What most business valuations leave out: the records

Tax law already treats a company's records as an asset. [Section 197](https://www.law.cornell.edu/uscode/text/26/197) of the Internal Revenue Code counts "business books and records, operating systems, or any other information base", including customer lists, as an intangible asset alongside goodwill, and the [Form 8594 instructions](https://www.irs.gov/instructions/i8594) put them in Class VI when an asset sale price is allocated. The [SBA](https://www.sba.gov/business-guide/manage-your-business/close-or-sell-your-business) tells sellers to count intangible assets such as customer information.

But the standard methods value records only through the earnings they help produce. A fee for licensing a copy to an AI developer is income the business has never earned, so it does not show up in SDE, EBITDA or the prices of comparable sales. It is a second number, and you have to ask for it separately.

That number now has public reference points. [MIT Technology Review](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/) reported in October 2026 that AI labs are buying data from dead startups to train their models, and [Fast Company](https://www.fastcompany.com/91528808/shuttered-startups-are-selling-old-slack-chats-and-emails-to-ai-companies) that shuttered startups are selling old Slack chats and emails to AI companies. Origin's [deals tracker](https://origindatapartners.com/guides/ai-data-licensing-deals) records shut-down startups selling Slack and email archives for up to six figures, and its [study of eight buyer programs](https://origindatapartners.com/guides/ai-company-data-buyer-programs-study) found that the typical published range for a company runs from about $50K at the low end to $843K at the top. Records that tend to carry this value:

- Email and chat archives: see [selling Slack and email archives](https://origindatapartners.com/guides/sell-slack-email-archives-ai-training).
- Support tickets and customer conversations: see [licensing support tickets](https://origindatapartners.com/blog/license-support-tickets-for-ai).
- Work orders, job notes and inspection records: see [field service records](https://origindatapartners.com/guides/sell-field-service-records-ai-training).
- Code repositories and technical documentation: see [selling source code](https://origindatapartners.com/guides/sell-source-code-ai-training).
- Procedures, checklists and project files: see [what company data can be sold](https://origindatapartners.com/guides/what-company-data-can-you-sell-to-ai).

Source: [Cornell LII: 26 U.S. Code section 197, amortization of goodwill and certain other intangibles](https://www.law.cornell.edu/uscode/text/26/197)

## Before you sell or close, check what the records are worth

Two moments decide whether that value survives: signing a purchase agreement, which normally transfers the records with the business, and cancelling company systems, which deletes them. Checking the value first takes minutes: [see what your company's records are worth](https://origindatapartners.com/check-fit) from six questions about the business, with no files or system access.

- Describe the records at company level: which systems, which years and roughly how many tickets, messages, jobs or files. The [data inventory template](https://origindatapartners.com/blog/company-data-inventory-template) gives the columns.
- Keep the systems and an admin account running until you know. Several vendors delete data soon after cancellation, so export before you cancel anything.
- Plan for privacy. These archives name staff and customers; suppliers scrub personally identifiable information and exclude HR records, according to [MIT Technology Review](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/). See [how to de-identify company data](https://origindatapartners.com/guides/de-identify-company-data-before-licensing).


## Business valuation vs records valuation: what each covers

They answer different questions and come from different people. Origin is not a business valuator. It does not appraise a business, its shares or its assets for a sale, a loan, a tax filing or a dispute. It estimates what AI developers could pay to license a copy of the company's operational records, and helps the owner compare buyers.

|  | Business valuation | Records valuation |
| --- | --- | --- |
| Question it answers | What the whole business, or a share of it, is worth to a buyer | What AI developers could pay to license a copy of its operational records |
| Who does it | An accredited valuator (for example ABV or CVA, or in Canada the Chartered Business Valuation certification), or for a small business an accountant experienced in valuation | A data partner such as Origin. The free valuation is an estimate, not an appraisal |
| Based on | Earnings, assets and comparable sales: the income, market and asset approaches | The kind of business, the years of history in its systems, headcount, the systems used every day and whether the data is the company's to license |
| What you provide | Financial statements for several years, tax returns, projections and an add-back schedule | Answers to six questions; no files or system access |
| Cost | A fee that varies with the size and complexity of the business | Free |
| Result | A value for the business or the ownership interest | An estimate of what AI companies could pay for the records, from $20K to $5M |
| In the sale price? | Yes, it is the basis for the price | Only if the business already earns licensing income; otherwise it is a separate deal |

Source: [BDC: How to value a business you would like to acquire (July 2025)](https://www.bdc.ca/en/articles-tools/start-buy-business/buy-business/how-value-business-youd-like-acquire)

## How to get a business valuation and a records valuation

Get both before you sign a letter of intent or cancel any system. The records valuation takes minutes, so there is no reason to wait for the business valuation before starting it.

- Find a valuator through your accountant, lawyer and network, and look for experience in your industry, [BDC](https://www.bdc.ca/en/articles-tools/start-buy-business/buy-business/how-value-business-youd-like-acquire) advises. For a sale, choose one both sides accept to avoid duelling valuations.
- Check the credential. The AICPA's [ABV credential](https://www.aicpa-cima.com/cpe-learning/credential/abv-credential) requires AICPA membership in good standing, passing the ABV exam or a qualifying valuation exam and minimum experience and education. NACVA awards the [Certified Valuation Analyst (CVA)](https://www.nacva.com/credentials/cva) designation. In Canada, BDC recommends someone who holds the Chartered Business Valuation certification, administered by the Canadian Institute of Chartered Business Valuators.
- For a smaller business or a sale to family members, an accountant experienced in valuation may give an adequate sense of the value, and the fee for a valuator varies with the size and complexity of the business (BDC).
- Gather the inputs a bank or valuator will ask for: financial statements for the past several years, year-to-date results and projections, the prior year's tax return and a list of discretionary and one-time expenses (BDC).
- For the records, answer the six questions in the [free valuation](https://origindatapartners.com/check-fit). Nothing is shared with a buyer without your approval.

Source: [BDC: How to value a business you would like to acquire (July 2025)](https://www.bdc.ca/en/articles-tools/start-buy-business/buy-business/how-value-business-youd-like-acquire)

## Selling the business and licensing its data separately

You can often do both. The business can license a de-identified copy of its records before signing, or keep that right in the purchase agreement, and disclose it to the buyer. After closing, the records normally belong to the buyer, so a later license needs their agreement. Licensing also raises privacy questions that the sale itself may not. [Licensing company data when you sell the business](https://origindatapartners.com/guides/license-company-data-when-selling-business) covers the options and the rules. For the sale itself, from exit options to taxes, see [how to sell a business](https://origindatapartners.com/guides/how-to-sell-a-business).

In an asset sale the price is allocated across asset classes, and business books and records are Class VI assets on Form 8594 ([IRS](https://www.irs.gov/instructions/i8594)). Tell your adviser early if you plan to license a copy, so the purchase agreement and the allocation reflect it. If the company is closing rather than selling, see [selling company data after closing](https://origindatapartners.com/guides/sell-company-data-after-closing) and the [closing checklist](https://origindatapartners.com/guides/closing-a-business-checklist).

Source: [IRS: Instructions for Form 8594, asset acquisition statement](https://www.irs.gov/instructions/i8594)

## Next step

Have the business valued by an accredited professional, and have the records valued before anything is signed or cancelled. The records valuation takes six questions and no files.

Origin Data Partners is independent and is not affiliated with any AI data buyer. We help owners compare buyers and find the best fit for their records. [See what your data is worth](https://origindatapartners.com/check-fit).


## Questions and answers

### How do I calculate what my business is worth?

Work out the earnings figure buyers will use: seller's discretionary earnings (SDE) for a small owner-run business, or adjusted EBITDA for a larger one. Multiply it by a multiple for businesses of your size and industry, then check the result against the value of the assets minus liabilities and against what similar businesses sold for. For a sale, a loan or a tax filing, hire an accredited valuator.

### What is the most common business valuation method?

For a sale, a multiple of earnings. Canada's BDC calls a multiple of EBITDA the most common method for setting a fair sale price, and puts it between three and six times for a small to medium-sized business, depending on market conditions. Small owner-run businesses are usually priced on SDE instead. Valuators confirm the figure with the asset and market approaches.

### What multiple of profit is a small business worth?

It depends on size and industry. The Market Pulse survey for the second quarter of 2026, as reported by SCORE, put the multiple at 2.0 times SDE for deals under $500,000, 2.8 times for $500,000 to $1 million and 3.1 times for $1 million to $2 million. Deals of $2 million to $5 million went for 4.0 times EBITDA, and $5 million to $50 million for 5.8 times.

### What is the difference between SDE and EBITDA?

SDE adds one full-time owner's salary and benefits back to profit, so it shows the total benefit to an owner-operator. Adjusted EBITDA replaces the owner's pay with a market-rate salary for the role. SDE is used for smaller owner-run businesses and EBITDA for larger ones with management in place; EBITDA multiples are higher but apply to a smaller figure.

### Do I need a professional business valuation?

For a sale, a buy-in, new financing, a partner leaving, retirement planning or a dispute, usually yes, and in a sale it helps when both sides agree on the valuator. Look for a credential such as ABV or CVA, or in Canada the Chartered Business Valuation certification. For a smaller business or a sale within the family, an accountant experienced in valuation may be enough. Fees vary with the size and complexity of the business.

### Does a business valuation include the value of company data?

Only indirectly. Business books and records and customer information are intangible assets, and a valuation counts them through the earnings they support. It does not count a licensing fee the company has never earned, such as what AI developers could pay for a copy of its tickets, email, chat or code. That needs a separate records valuation.

### Can Origin value my business?

No. Origin is not a business valuator and does not appraise businesses, shares or assets. It estimates what AI developers could pay to license the company's operational records, from six questions and no files, and helps owners compare buyers. For the business itself, use an accredited valuator.

### Is an online business valuation calculator accurate?

It gives a rough figure. A calculator multiplies an earnings figure by a typical multiple, so it cannot see your add-backs, your assets or how much the business depends on you, and multiples vary by size, industry and risk. Use it as a starting point and check it with a professional valuation.

## Sources

- [SBA: Close or sell your business (valuation methods)](https://www.sba.gov/business-guide/manage-your-business/close-or-sell-your-business)
- [IRS: Internal Revenue Manual 4.48.4, Business Valuation Guidelines](https://www.irs.gov/irm/part4/irm_04-048-004)
- [Revenue Ruling 59-60, via the American Society of Appraisers](https://www.appraisers.org/docs/default-source/6.-publications/vab6/ch-34-revenue-ruling-59-60.pdf)
- [BDC: How to value a business you would like to acquire (July 2025)](https://www.bdc.ca/en/articles-tools/start-buy-business/buy-business/how-value-business-youd-like-acquire)
- [SCORE: EBITDA and SDE, the earnings metrics that drive small business valuations (Oct 2026)](https://www.score.org/articles/ebitda-vs-sde/)
- [NYU Stern (Aswath Damodaran): enterprise value multiples by sector, US, January 2026](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/vebitda.html)
- [Cornell LII: 26 U.S. Code section 197, amortization of goodwill and certain other intangibles](https://www.law.cornell.edu/uscode/text/26/197)
- [IRS: Instructions for Form 8594, asset acquisition statement](https://www.irs.gov/instructions/i8594)
- [AICPA & CIMA: Accredited in Business Valuation (ABV) credential](https://www.aicpa-cima.com/cpe-learning/credential/abv-credential)
- [NACVA: Certified Valuation Analyst (CVA)](https://www.nacva.com/credentials/cva)
- [MIT Technology Review: AI labs buying data from dead startups (Oct 2026)](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/)
- [Fast Company: shuttered startups are selling old Slack chats and emails to AI companies (Apr 2026)](https://www.fastcompany.com/91528808/shuttered-startups-are-selling-old-slack-chats-and-emails-to-ai-companies)

## Related reading

- [Selling your business or practice: can you license its data separately?](https://origindatapartners.com/guides/license-company-data-when-selling-business)
- [How much do AI companies pay for company data?](https://origindatapartners.com/guides/company-data-value)
- [What AI buyers publish for company data: 8 programs and 24 listings compared (October 2026)](https://origindatapartners.com/guides/ai-company-data-buyer-programs-study)
- [AI data licensing deals tracker: who paid what, 2023 to 2026](https://origindatapartners.com/guides/ai-data-licensing-deals)
- [Closing a software business: what could have value beyond the code?](https://origindatapartners.com/guides/sell-company-data-after-closing)