Frequently asked questions — Business asset sale
What is EBITDA and why is it used in business valuation?
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of a business's core operating profitability. Many buyers and lenders consider EBITDA when evaluating a business. This calculator provides an estimate; actual valuations may vary.
What are typical EBITDA multiples for different industries?
Industry averages vary significantly. Restaurant multiples depend on profitability, lease terms, location, and equipment. No standard multiple applies to all businesses. The selector above allows you to explore different scenarios.
How is the sale price calculated using EBITDA?
Estimated Sale Price = Annual EBITDA × Selected Multiple × Location Factor. This is a simplified method. Actual prices depend on due diligence, inventory, debt, and negotiation.
What is the difference between an asset sale and a share sale?
Asset sale: buyer purchases specific assets. Share sale: buyer purchases company shares. Each has different tax and legal implications. Professional advice is recommended.
Does this calculator include owner salary and add-backs?
Yes, owner salary is included as an operating expense. This tool does not automatically add back discretionary expenses.
How does location affect business value in Calgary?
Location influences buyer interest. The calculator applies a modest adjustment based on the Calgary area selected. Actual value depends on foot traffic, demographics, and lease stability.
Is this calculator a formal business valuation?
No. This is an estimate for informational purposes only. A formal valuation requires detailed review by a licensed professional.
What happens if my business has negative EBITDA?
If EBITDA is negative (expenses exceed revenue), the standard EBITDA valuation method does not apply. The calculator shows "Not applicable." Your business may still have asset value or turnaround potential. General sale advice: Even with negative EBITDA, a business may be saleable in a distressed sale, asset liquidation, or to a strategic buyer. Professional advice is strongly recommended.