What is Business Valuation?
Business valuation is the process of estimating what a business is worth, normally based on a multiple of its normalised annual profit (EBITDA), or on its net assets for a business that is not yet consistently profitable.
A real Kenyan example
A salon with normalised EBITDA of KES 800,000 and a sector multiple of 2.5x is worth roughly KES 2,000,000.
Formula
Indicative value = EBITDA × sector multiple
Why it matters
Owners need a real number, not a guess, when selling, bringing in a partner or investor, planning succession, or using the business as loan security.
How Veira helps
Veira keeps a clean, accurate record of revenue, cost of goods and expenses, so your EBITDA is always ready to plug into a valuation, not reconstructed from memory.
FAQs
What is the easiest way to value a small business?
Normalise your annual profit into EBITDA (add back owner-specific and one-off costs), then apply a multiple typical for your sector.
What multiple should I use?
It varies by sector and risk: roughly 2-3x EBITDA for retail and food, 3-4x for services, higher for recurring-revenue tech. Treat these as a starting point, not a rule.
Is this a real, bank-grade valuation?
No. Use it for planning and expectation-setting; get an accountant or licensed valuer for an actual sale, transfer or dispute.
Does debt affect the valuation?
Yes. The EBITDA-multiple figure is enterprise value; subtract outstanding loans and liabilities to get closer to what an owner actually keeps.
What raises a business's valuation?
Clean, complete records, low dependence on the owner personally, low customer concentration, and a rising revenue trend.