Business Valuation Calculator

This tool calculates two ‘valuations’ based upon your sales, cost of sales and other factors:

1. A simplified Seller’s Discretionary Earnings (SDE) valuation. This valuation is best suited to businesses valued at below 5,000,000 SAR
2. A simplified Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) valuation. This valuation is best suited to businesses valued above 5,000,000 SAR

We then present these as a range, displaying the lowest ‘valuation’ first.

Note that this tool only calculates a simplified valuation – we can’t know all the factors which make your business attractive to buyers.

For example, a competing business may pay a higher price to reduce competition or create synergies.

Important: Coast cannot provide advice on tax, accounting or business valuations. We recommend that you speak to an accountant or business valuation specialist.

We add your annual sales and owners salary together to represent the cashflow of the businesses, then subtract your cost of sales.

This is then multiplied by a generic non-industry specific multiplier, as cashflow is the most important factor in a SDE valuation:

Next, we add on your non-operational assets. This assumes your potential buyer sees these assets as cash equivalent – they may want a reduction and you should adjust for this.

Finally, we multiply the valuation by some conditional factors. For example, we apply a bonus of 20% if your business has more than 2 years in business and similar multipliers if your profits are growing.

We calculate a simplified EBITDA valuation based upon the fields you have completed.

This is then multiplied by an industry specific multiplier, sourced from a 2015 Capital Markets Report produced by the Pepperdine Private Capital Markets Project (page 9).

As with the SDE valuation, we then multiply the valuation by some conditional factors. For example, we apply a bonus of 20% if your business has more than 2 years in business and similar multipliers if your profits are growing.

Costs of sales is the total of all costs used to create a product or service, which has been sold.

This does not contain administrative expenses, interest payments or taxes. It does not include the cost of running your sales or marketing departments.

Cost of sales is also known as cost of good sold (COGS)

Anything payments you make to yourself (or other business owners). This could be salary, bonuses, benefits or even travel expenses.

If you sold the company, these payments would stop – so they shouldn’t count towards your on-going expenses in our calculations.

When businesses buy an asset, they tend to use it over a long time period.

Depreciation allows you to spread the cost of an asset over the time period it is being used within.

In this field, enter how much cost due to depreciation is occurring in the current year. If you are unsure, leave this field blank.

The sale price of any assets your business owns that are not directly used in sales, e.g. unused land, spare equipment, investments etc.

This field assumes your potential buyer sees these assets as cash equivalent – they may want a reduction and you should adjust for this.