How much is my small business worth in Alberta?

There is no single price list for businesses. But most Alberta owners can get a sensible rough range with a few numbers they already have.

The short answer

Most small owner-run businesses sell for a multiple of what the business earns for its owner each year. The multiple is often somewhere between about 1.5 and 4 times, depending on the type of business and how easy it would be for someone else to run. Our free estimate does this math for you in a couple of minutes, with no sign-up.

Step 1: work out what the business really earns you

Start with your profit before tax. Then add back things a new owner would not have to pay, such as your own salary or wages, one-time costs, and personal expenses run through the business. Your accountant can help you do this properly. Buyers will ask how you got the number, so keep notes.

Step 2: apply a sensible multiple

As a rough guide, these are the ranges our calculator uses. They are rules of thumb, not appraisals:

• Food and hospitality: about 1.5 to 2.5 times yearly earnings
• Retail: about 1.8 to 2.8 times
• Trades and construction: about 2.0 to 3.2 times
• Automotive: about 2.0 to 3.0 times
• Manufacturing: about 2.5 to 4.0 times

A worked example

Say you run a plumbing and heating business in central Alberta. After adding back your own wages and a few personal costs, it earns you about $150,000 a year. A rough range at 2.0 to 3.2 times would be about $300,000 to $480,000, plus or minus things like vehicles, tools and inventory. Where you land in that range depends on the points below.

What Alberta buyers look at

• Steady numbers over several years. If sales dipped when oil prices fell and then recovered, show the whole pattern and explain it.
• How much depends on you. If customers only call you, the business is worth less to a stranger. Training a manager and writing down how things are done helps.
• Your lease. A long, transferable lease at a fair rent adds comfort. A lease ending soon worries buyers.
• Staff who will stay. Skilled trades people are hard to find in many Alberta towns, so a settled crew is worth a lot.
• Equipment and vehicles in good working order, with service records.
• Location. Calgary and Edmonton have more buyers. In smaller towns the buyer pool is smaller, but a local buyer may value your reputation highly.

Getting a firm number

Use the rough range to decide whether selling makes sense now. Then ask your accountant, or a Chartered Business Valuator for bigger or more complicated sales. For a deeper look at the methods, read what is my small business worth? and EBITDA multiples explained. When you're ready, see how to sell in Alberta without a broker.