The basic formula
Most small businesses are priced as a multiple of Seller's Discretionary Earnings (SDE) — the cash flow available to a single owner-operator after normalizing the books.
Service businesses commonly trade at 2×–4× SDE. Restaurants and retail tend lower (1.5×–3×). Healthcare and online businesses tend higher (2.5×–5×).
What moves the multiple
Length of operating history, growth trend, owner-dependence, customer concentration, and recurring revenue are the five biggest drivers of where you land within an industry's range.
Asking price vs. value
Asking price typically sits at or just above the high end of the value range, with room for negotiation. Including assets like equipment, inventory, or real estate adjusts the picture.