How to Value a Business Before You Buy or Sell
What is a business actually worth? Learn the common valuation methods used in India so you can price a sale — or an offer — with confidence.
Whether you are selling your business or making an offer, you need a defensible number. Valuation is part maths, part judgement. These are the methods most commonly used for small and medium businesses in India.
1. Profit multiple (most common)
Small businesses typically sell for a multiple of their annual profit — often 1x to 4x SDE (Seller's Discretionary Earnings) or EBITDA, depending on the industry, growth and how dependent the business is on the owner. A stable, growing business with systems in place earns a higher multiple.
2. Asset-based value
For asset-heavy businesses (manufacturing, restaurants), add up the market value of equipment, inventory and property, minus liabilities. This sets a floor price even if profits are thin.
3. Revenue multiple
Fast-growing or online businesses are sometimes valued as a multiple of annual revenue, especially when profit is being reinvested into growth.
Factors that move the price
- Consistent, verifiable financials increase buyer confidence and price.
- Customer concentration and owner-dependence lower it.
- Clean licences, transferable leases and documented processes raise it.
When you list on TradesWorld, showing clear revenue, profit and asset figures helps buyers value your business quickly. Explore live listings to see how comparable businesses are priced.