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Business valuation check: is the asking price fair?
Compare any listing with 27,000+ real US asking prices in its industry, and see if an SBA loan still works after you pay yourself. Medians, not averages. Every number shows its sample size.
What you'll get
- The listing's multiple against the median for its industry and price range, with the number of listings behind it
- Where it sits in the spread, not just against one average
- Whether the earnings cover an SBA loan at 1.25x, before and after your salary
- The highest price that still passes, and how long the down payment takes to come back
- The questions to ask the broker, picked from your numbers
Asking prices from US listings, not closed sales. Data as of 2026-09-30.
Short answer
A business is overpriced when its asking multiple sits well above similar listings and its earnings can't cover a loan after you pay yourself. Across 27,000+ US listings, the median asks about 2.6x SDE, about 1 in 3 asks more than its industry median, and about 11% are priced past the point an SBA loan can work at standard terms.
How to tell if a business for sale is overpriced
Compare its multiple with the median for the same industry and price range, then check that the earnings cover a loan after your salary. Those two checks catch most bad prices before you spend money on due diligence.
- 1Work out the multiple. Divide the asking price by the stated SDE, the seller's discretionary earnings shown as cash flow on most listings. A $360,000 price on $100,000 of SDE is 3.6x.
- 2Compare it with the same industry and price range. Find the median asking multiple for listings in the same industry and price band, and where the middle half of them sit. A listing 15% or more above the median needs a reason.
- 3Test it against a loan, after your salary. Take your own salary out of SDE, then check that what is left covers the annual loan payments by at least 1.25x on SBA-style terms.
- 4Ask the broker about the gap. Ask what justifies a premium, what the price includes, what needs replacing in year one and how many hours the owner really works.
What multiple should you pay for a small business?
Start from the median asking multiple for the industry, then negotiate down from it. Asking multiples are a ceiling, and sale prices usually land lower. Here are the industries with the most US listings to compare against.
| Industry | Median asking multiple | Middle half of listings | Listings compared |
|---|---|---|---|
| Restaurants | 2.4x SDE | 1.7x to 3.3x | 2110+ |
| Auto Repair | 2.8x SDE | 1.9x to 4.0x | 820+ |
| Pizzerias | 2.4x SDE | 1.8x to 3.1x | 700+ |
| Fast Food & Takeaway | 2.6x SDE | 1.9x to 3.4x | 680+ |
| Laundry & Dry Cleaning | 3.0x SDE | 2.0x to 4.7x | 590+ |
| Food & Beverage Wholesale | 2.0x SDE | 1.4x to 3.1x | 560+ |
| Landscaping & Lawn Care | 2.5x SDE | 1.6x to 3.3x | 550+ |
| Courier & Delivery | 3.1x SDE | 2.5x to 3.7x | 540+ |
| Bars & Pubs | 2.9x SDE | 2.2x to 4.5x | 530+ |
| Specialty Food Retail | 2.3x SDE | 1.6x to 3.2x | 520+ |
| General Contracting | 2.8x SDE | 1.9x to 3.8x | 500+ |
| HVAC | 2.4x SDE | 1.3x to 3.6x | 490+ |
Size matters as much as industry. Larger businesses ask higher multiples because they depend less on one owner, which is why the checker compares a $350,000 listing with other $250,000 to $500,000 listings in the same industry when it can. The full table for 120+ industries, split by state and price band, is in Main Street Index.
Why one average multiple misleads
The spread inside an industry is wider than the gap between industries. A laundromat at 2.1x and one at 4.6x are both in the middle half of US listings. A single "2 to 3 times earnings" rule can't tell you which side of that range a listing is on, or whether its premium is earned.
That's why the result shows the 25th percentile, the median and the 75th percentile with the listing's position on the same strip, and says how many listings sit behind every number.
The SBA test every listing has to pass
With 10% down, a 10.5% rate and a 10-year loan, a business stops covering its payments by 1.25x at about 5.5x SDE, and that is before the owner takes a salary. About 11% of US listings ask more than that. Take a $70,000 salary out of a $150,000 SDE and the highest price that passes falls by roughly half.
SBA 7(a) loans can be used for a change of ownership, up to $5 million (SBA.gov). Rates, fees and the down payment depend on the lender, so treat the defaults as a starting point and change them in the checker.
SDE, EBITDA and cash flow
- SDE (seller's discretionary earnings)
- Profit before the owner's pay and perks, interest, taxes, depreciation and one-off costs. What one owner-operator can take out.
- Cash flow
- What most small business listings call SDE. Same number, different label.
- EBITDA
- Used for bigger companies with a paid manager. It subtracts a market salary, so an EBITDA multiple is not comparable with an SDE multiple.
Asking prices vs sale prices
Every number here is an asking price from a live listing, not a closed sale. Sellers start high and many listings sit for months before a price cut, so the median asking multiple is a ceiling. Closed-deal reports, like BizBuySell's quarterly Insight Report, measure what businesses actually sold for and usually show lower multiples. Use asking data to spot outliers today, and closed data to anchor your offer.
What buyers say about asking prices
“On the surface, does a $65k asking price sound reasonable given those numbers?”
“That 2.7x number is a complete mathematical illusion... a market split so wide that a single average multiple is almost meaningless.”
“You then hand the file to your lender and the deal dies in review because it fails the 1.25x DSCR requirement.”
“Take the asking price and immediately add back the true working capital requirements plus any deferred CapEx... That bargain 3.0x asset is actually a 4.0x multiple.”
“Most listings start way too high and need to linger for 3+ months before the sellers come to their senses on value.”
How the checker works, and its limits
| What | How it's calculated | Limitation |
|---|---|---|
| Industry median and spread | Asking price ÷ stated SDE on US listings, median and 25th to 75th percentile per industry, split by asking-price band | Asking prices, not closed sales. Only shown with 30+ listings; smaller industries get no verdict |
| Above or below the median | The listing's multiple ÷ the median of its price band (or all sizes when the band is too small). In line means within 15% | Same fixed cut points as the Main Street Index listing pages. A premium can be justified by things a listing does not show |
| SBA check | Stated SDE (and SDE minus your salary) ÷ annual payments on a fully amortising loan. Defaults 10% down, 10.5%, 10 years | Assumed terms, not a quote. Lenders use tax-return cash flow, not the listing's SDE |
| Payback | Price ÷ SDE, and down payment ÷ what is left after salary and debt | Ignores taxes, growth and capex unless you add capex as an extra cost |
| Margin check | SDE ÷ revenue against the industry's median SDE margin | Only when you enter revenue. A high margin often means generous add-backs, not a better business |
| State comparison | The state's own median when at least 30 listings in that industry and state disclose both numbers | Most industry and state pairs are too small, so most states fall back to the national median |
The data is Main Street Index: businesses for sale from BizBuySell and 28 BusinessesForSale country sites, classified into 130+ industries, with a business listed on two sites counted once. This page uses the US listings that state both an asking price and SDE. Method and every known gap are in the Main Street Index docs. Nothing you enter is sent to a server or stored.
Frequently asked questions
How do I know if a business for sale is overpriced?
Divide the asking price by the stated SDE (seller's discretionary earnings) to get the multiple, then compare it with the median multiple for the same industry and price range. On US listings, about 1 in 3 asks more than its industry median and about 1 in 5 asks 1.5x the median or more. Then check that the earnings cover an SBA loan by 1.25x after you pay yourself. A price that fails both checks needs a reason you can verify, like real estate, recurring contracts or new equipment.
How much is a business worth?
For most small businesses, what a buyer will pay is a multiple of the owner's earnings (SDE). Across 27,000+ US listings that disclose both numbers, the median asking price is about 2.6x SDE. The multiple changes by industry and size: restaurants ask a median 2.4x, auto repair 2.8x and laundromats 3.0x. Bigger businesses ask higher multiples. A sale price is often lower than the asking price, so treat the median as a ceiling to negotiate from.
What is a good SDE multiple for a small business?
There is no single good multiple. It depends on the industry and the price range, which is why this checker compares a listing with its own industry and size band. On US listings the middle half of asking multiples runs from about 1.7x to 3.3x for restaurants and from about 2.0x to 4.7x for laundromats. A multiple near or under the median, that still passes a 1.25x SBA debt check after your salary, is a reasonable place to start negotiating.
Will an SBA loan cover this asking price?
Lenders usually want the business's earnings to cover the annual loan payments by at least 1.25x. With 10% down, a 10.5% rate and a 10-year term, that line sits at about 5.5x SDE before the owner takes any salary, and about 11% of US listings ask more than that. Once you take a salary out of SDE, the highest price that passes drops. The checker shows both numbers and lets you change the terms. SBA 7(a) loans can be used for a change of ownership, up to $5 million.
What is SDE, and how is it different from EBITDA or cash flow?
SDE (seller's discretionary earnings) is profit before the owner's own pay, perks, interest, taxes, depreciation and one-off costs. It is what one full-time owner-operator could take out of the business. EBITDA is used for bigger companies with a paid manager and subtracts a market salary for that role. Most small business listings call SDE "cash flow". Use the listing's stated figure in the checker, then verify it against tax returns before you make an offer.
Is this the same as a business appraisal or valuation?
No. It is a market check: it compares one listing's asking multiple with the asking multiples of similar listings, and tests the price against a standard loan. A certified appraisal reviews the books, assets and lease, and a lender may require one. Use the checker to decide which listings deserve that work and what to ask the broker first.
Where does the data come from, and are these sale prices?
They are asking prices, not closed sales. The medians come from BigIdeasDB's Main Street Index, a census of businesses for sale from BizBuySell and 28 BusinessesForSale country sites, with businesses listed on two sites counted once. A median is only shown when at least 30 US listings in that industry disclose both price and SDE, and every result shows how many listings it uses. Closed-deal data, such as BizBuySell's quarterly Insight Report, usually shows lower multiples than asking prices.
Why does the checker ask for my salary?
Because SDE includes the owner's pay. If you need $70,000 a year to live on, that comes out of SDE before anything can go to the loan. Many listings look financeable until the buyer's salary is taken out. The default is $70,000. Set it to what you actually need, or to zero if you will hire a manager and have other income.