What Is My Business Worth? An Indiana Broker Explains
By Troy Frank, Owner — Indiana Equity Brokers
Estimated read time: 7 min
The short answer: Most Main Street businesses in Indiana sell for 2 to 3 times their annual seller’s discretionary earnings (SDE). Nationally, the median small business sold for $349,250 in Q2 2026 on median cash flow of $155,921 — an average multiple of 2.7x. But the multiple is the last step, not the first. What actually sets your number is earnings quality, how much the business depends on you, and how concentrated your customer base is. Two businesses with identical profit can be worth $600,000 apart because of those three things alone.
An owner called me last spring with a number in his head. He’d been told his HVAC company was worth “about a million.” He’d built a retirement plan around it. He’d told his wife.
His actual range was $1.6 million. He’d been under-planning his own retirement by six figures for years.
That happens in both directions, and it happens constantly. According to the UBS Investor Watch survey, 58% of business owners who planned to exit had never had their business formally appraised. Forty-eight percent had no formal exit strategy at all. That means most owners are making the largest financial decision of their lives using a number someone mentioned at a golf outing.
Here’s how the number actually gets built.
What Is My Business Worth? Start With SDE, Not Revenue
Revenue is the number owners quote. Buyers barely look at it.
What buyers and their lenders underwrite is seller’s discretionary earnings — your net profit, plus your owner salary, plus the personal expenses running through the business, plus depreciation and interest. SDE is the honest answer to “how much money does this business actually put in the owner’s pocket each year?”
Get SDE right and you’re most of the way to a valuation. Get it wrong and every conversation after that is wasted.
For scale: in Q2 2026 the national median small business transaction showed $692,087 in revenue and $155,921 in SDE. That’s a business with roughly 22% owner earnings on revenue. If your margins are meaningfully below that, the multiple conversation gets harder no matter how good your top line looks.
Add-backs have to survive a lender
This is where most owner-prepared valuations fall apart.
Owners add back everything. The truck, the phone, the family member on payroll, the trip to Scottsdale that was “partly a conference.” Some of that is legitimate. Some of it isn’t. And an SBA lender will strip out every add-back you can’t document with a receipt or a clear pattern.
I’ve watched a deal lose $180,000 of value in underwriting because $60,000 of add-backs couldn’t be supported. At a 3x multiple, undocumented add-backs are expensive.
Then the Multiple — and Why Yours Might Not Be 2.7x
The average cash flow multiple nationally is about 2.7x. Treat that as a starting point, not a promise.
Main Street businesses under roughly $250,000 in SDE tend to land between 2x and 3x. Once SDE clears $500,000 to $1 million, you move into lower middle market territory, buyers change from individuals to search funds and private equity groups, and multiples step up — often 4x to 6x EBITDA depending on the industry.
Industry matters too. In Central Indiana over the past 18 months, we’ve seen strong buyer demand for commercial service businesses — HVAC, plumbing, electrical, landscaping — with recurring or contracted revenue. Those trade at the top of their range. Businesses with one-time project revenue and no backlog trade at the bottom.
The Three Things That Actually Move Your Number
Same profit, different value. Here’s why.
Owner dependency. If revenue drops when you leave, a buyer isn’t purchasing a business. They’re purchasing your job. Every buyer prices that risk, and lenders price it harder. The fix is boring and it works: a real second-in-command, documented processes, customer relationships that belong to the company.
Customer concentration. One customer above 30% of revenue is a material issue. A top three above 50% is the central issue in the deal. It rarely kills a sale, but it reshapes the structure — more of the price moves into a seller note or an earnout tied to those accounts sticking around.
Clean, reconciled books. What actually kills deals isn’t price. It’s the seller’s books. If your P&L doesn’t reconcile to your tax return, a buyer stops trusting every other number you’ve given them. That distrust gets priced in, and it never gets priced in your favor.
Myth: A Valuation Means You’re Selling
This is the belief that costs owners the most money.
A valuation is a diagnostic. It tells you where the value is concentrated, what’s suppressing it, and what a buyer would flag. Then you have time to fix those things — which is the entire point of getting one early.
Fixing customer concentration takes two to three years. Building a management layer takes eighteen months. Getting three clean years of financials takes three years, by definition. None of that is possible at the moment you decide to sell.
There’s a practical reason too. Unsolicited offers arrive. A partner retires. Health changes. When you already know your range, you can evaluate an offer in a week instead of scrambling for three months while the buyer loses interest. That’s a real risk — we’ve seen what it costs owners who wait too long.
How a Broker Values a Business Differently Than a Formal Appraisal
There are two different products and owners often ask for the wrong one.
A certified appraisal is a defensible document for estate planning, divorce, litigation, or an ESOP. It costs several thousand dollars and follows formal standards.
A broker opinion of value answers a different question: what will the market actually pay right now? It’s built from comparable closed transactions, current buyer demand, and what lenders are willing to finance this quarter. For an owner thinking about a sale in the next one to five years, that’s usually the more useful number.
At Indiana Equity Brokers we’ve closed more than 880 transactions over 24 years, representing over $808 million in value. That transaction history is what makes a market-based opinion of value useful — we’re not pulling multiples off a chart, we’re pulling them off deals we closed.
Frequently Asked Questions
How much is my small business worth?
Most Main Street businesses sell for 2 to 3 times seller’s discretionary earnings, with the national average landing near 2.7x in Q2 2026. Businesses above roughly $1 million in earnings typically shift to an EBITDA multiple in the 4x to 6x range. Your specific number depends on owner dependency, customer concentration, and whether your financials reconcile cleanly.
What is SDE and how is it different from profit?
Seller’s discretionary earnings is net profit plus the owner’s salary, personal expenses run through the business, depreciation, interest, and one-time costs. It represents the total financial benefit to a single working owner. Net profit alone understates what the business produces, which is why nearly all Main Street valuations are built on SDE rather than net income.
How much does a business valuation cost in Indiana?
A certified appraisal generally runs several thousand dollars. A broker’s opinion of value is typically provided at no cost as part of an initial conversation about selling. They answer different questions — an appraisal is a defensible document for legal or estate purposes, while an opinion of value estimates what buyers will actually pay in the current market.
How often should I get my business valued?
Every two to three years if a sale is more than five years out, and annually once you’re inside a five-year window. Regular valuations show whether the decisions you’re making are actually increasing value, and they mean you can respond to an unsolicited offer with real information instead of a guess.
Will getting a valuation obligate me to sell my business?
No. A valuation is confidential and carries no obligation. Most owners who get one are not selling that year — they’re using it to identify what a buyer would discount and to fix those issues while there’s still time.
Know Your Number Before You Need It
Your business is probably your largest asset. Most owners can quote their home’s value within 5% and have no idea what their company is worth within 50%.
The gap matters most at the moment you can’t control — an unsolicited offer, a health event, a partner’s exit. Owners who already know their range make good decisions quickly. Owners who don’t make fast decisions with bad information.
If you’re curious what your business would bring in today’s market, a confidential conversation costs nothing and obligates you to nothing. Over 24 years I’ve helped Indiana business owners sell more than 880 companies, and most of those conversations started years before the listing did. Reach me at troy@indianaequitybrokers.com, or start with what we look at when we assess what makes a business worth more. If you’re further along, our guide to selling a business walks through what comes next.
