Chapter 3: Assess the price before you make an offer

How to assess the price of a business as a buyer: normalise owner salary and one-offs, understand EBITDA and multiples, and spot red flags in the figures.

5 min readUpdated 3 November 2026

The asking price in a listing is the seller’s expectation, not the value of the business. As a buyer, you need to form your own assessment based on the figures, the risk and what you yourself can bring. That assessment determines your first offer, how far you will go in the negotiation and what you can get financed. This chapter covers how to read the figures as a buyer and where to find a basis for comparison.

Two sides of the same coin

The seller guide has a thorough chapter on business valuation with methods, DCF and rough rules of thumb by industry. Here we look at the same thing from the buyer’s side: what should you check before you trust the figure?

Start with the normalised earnings

The result in the accounts rarely shows exactly what the business will earn under you. Normalisation means adjusting the figure so that it reflects ordinary operations with a new owner. The most important adjustments are:

Owner’s salary: what does it cost to hire someone to do the owner’s work? If the owner takes no salary, or family members work for free, a market salary must be deducted.
Private expenses: a car, phone and travel that the owner has run through the business can be added back, but only if they can be documented.
One-off items: a large single order, an insurance claim or a move are not part of normal operations.
Rent and agreements with related parties: if the business rents premises from the owner at a low price, you should allow for the market rent.
Deferred investment: if equipment, the website or systems are worn out, replacing them must be part of your calculation.

Ask the seller for a statement of the normalisations and the documentation behind them. Sellers naturally normalise in their own favour, so go through each item and only accept those that can be documented.

EBITDA, profit and the owner’s earnings

Figure	What it shows	Watch out
Revenue	How much the business sells	Says nothing about what is left
EBITDA	Operating earnings before interest, tax and depreciation	Ignores that equipment has to be replaced
Owner’s earnings (SDE)	Profit before owner’s salary and private expenses	Includes your own salary, so you have to live off it
Profit before tax	Profit after depreciation and interest	Affected by the seller’s financing and tax choices
Cash flow	How much money actually comes in	Stock and receivables can tie up a lot of money

The key thing is that you and the seller are talking about the same figure. A price based on the owner’s earnings before salary looks low if you think it is based on EBITDA after a market salary. Always ask which figure the multiple has been calculated on.

Multiples: how many years of earnings are you paying for?

The price of smaller businesses is typically set as a multiple of the profit: normalised earnings times a multiple. The multiple expresses how many years of earnings you are paying for. The greater the risk, the lower the multiple. What typically pushes it up or down is:

Stability: recurring revenue and a long track record give a higher multiple than fluctuating projects.
Customer spread: dependence on a few customers pulls it down.
Owner dependence: the more the business rests on the seller personally, the lower the multiple.
Growth: documented growth over several years pushes it up; a decline must be explained.
Size: small businesses generally trade at lower multiples than larger ones, because the risk is greater.

Trends and quality of the figures

Look at at least the last three years and the current year, month by month. A price based on a single record year is risky. Compare the figures in the accounts with the source: bank account, payment provider, webshop platform and VAT returns. Ask about seasonal fluctuations and what has happened to revenue since the latest accounts were prepared.

Red flags in the figures

The revenue in the accounts does not match the bank, the payment provider or the VAT returns.
The normalisations are large and cannot be documented.
Profit rises sharply just before the sale, for example because marketing or maintenance has been cut.
One customer, one supplier or one traffic source accounts for a large share of the business.
The stock is large relative to sales, or there are old goods that cannot be sold.
Receivables have grown faster than revenue, or there are old unpaid invoices.
There is unpaid VAT, tax or debt to public authorities.
The seller will not give access to source data such as the bank or analytics tool.

Tools for assessing the price on Sitavo

[Free valuation calculator](/vaerdiansaettelse): an indicative price range based on key figures and industry. You can also order a report with a price range, multiples and comparable deals.
[The Sitavo index](/markedsdata/indeks): asking price relative to profit and revenue for businesses sold through Sitavo, overall and by industry. It is based only on completed deals, and a figure is only shown when there are at least five deals behind it.
Compare: put up to three listings side by side with price relative to profit.
[Goodwill](/hjaelp/goodwill): how the part of the price that exceeds the assets is assessed and treated.

Know your limit before you bid

Work out what the business can bear in interest and repayments after your own salary, and set a maximum price before the negotiation starts. That limit protects you from getting carried away, especially in a bidding round or an auction. Once you have a price you believe in, the next step is financing.

Frequently asked questions

For smaller businesses, the most common method is to multiply the normalised earnings by a multiple that reflects risk and growth. The figure is a starting point; the final price depends on the negotiation, the financing and what you find in due diligence.
Goodwill is the part of the price that exceeds the value of the tangible assets such as fixtures, stock and equipment. It covers, for example, the customer base, name, location and established processes. When buying small service businesses and digital businesses, it is often most of the price.
Because many owners take a salary that is lower or higher than the cost of hiring someone to do the same work. If you deduct a market salary, you see what the business really earns when you or an employee has to do the work.
EBITDA is earnings before interest, tax, depreciation and amortisation. The profit in the accounts is after those items. EBITDA shows the operating earnings without financing and depreciation, but remember that equipment has to be replaced, so investments must also be part of your assessment.
The Sitavo index shows the asking price relative to profit and revenue for businesses sold through Sitavo, broken down by industry. A figure is only shown when there are at least five completed deals behind it. The free valuation calculator gives an indicative range for a specific business.