What is my business worth?

A business is worth what a specific, qualified buyer will actually pay for it — a figure built from normalized earnings, or from net assets for an asset-heavy operation, run through a multiple or rate that reflects how risky those future earnings look to that buyer, then adjusted for deal structure and whatever surfaces once due diligence starts. That number is almost never the same as the figure an owner reaches by totalling what the business has cost in years, effort and capital, and the gap between the two is one of the most common reasons a listing sits unsold for months with no serious offer. This page is the map: the sequence a business actually moves through on the way to a number, the decision points inside it, and where to go for the detail behind each one. For the step-by-step mechanics of how a valuation is actually built, see How to Value a Business in Canada; this page instead answers the owner’s version of the same question — what will a buyer actually pay, and why does that figure so often land below what you expected.

Your number and the market’s number usually start from different places

Owners typically arrive at a figure by totalling what the business has cost them personally — years of unpaid overtime, capital reinvested instead of paid out, income foregone at a job elsewhere — and treat that total as a floor. A buyer starts from a completely different place: what the business will generate for them going forward, discounted for every way that could go wrong. How Do I Know What My Business Is Worth? works through the market side of that calculation in more depth, and Why Is My Business Worth Less Than I Expected? goes through the specific reasons that gap shows up most often — owner dependence, unclear financials, a concentrated customer list, or a softening trend, rather than a buyer simply undervaluing the business. Treadstone Law’s own commentary on the difference between an asking price and fair value makes the same point from the seller’s side of the negotiating table: what you list at and what the market actually supports are two separate figures until real offers arrive. The distance between the two starting points has its own name, a Valuation Gap, and closing it takes documented evidence, not a stronger opinion — a case for why the earnings are sustainable and the risk lower than a skeptical buyer would assume by default.

Normalized earnings are the number everything else gets built from

Before any multiple gets applied, reported profit has to be adjusted into a figure that reflects what a new owner would actually experience — adding back the current owner’s compensation, personal expenses run through the business, and genuinely one-time items, while leaving in the real, ongoing cost of running the place. For a business the owner still works in personally, that adjusted figure is Seller’s Discretionary Earnings; once a business is professionally managed and pays market-rate wages for every role including the owner’s, EBITDA — earnings before interest, tax, depreciation and amortization — becomes the more accurate lens, with EBITDA Margin the shortcut for comparing operating efficiency once you get there. SDE vs EBITDA and SDE vs EBITDA: Which One Applies to Your Business both work through exactly which figure fits a given business, and why applying a multiple built against one of these measures to the other produces a number that is quietly, sometimes dramatically, wrong. Get this step wrong and every calculation stacked on top of it is wrong too, however carefully the rest of the exercise is done.

A multiple turns that earnings figure into a price

An Asking Multiple states a price as a multiple of that normalized earnings figure, and it is a starting point for a conversation, not a fact — a Rule-of-Thumb Valuation applies a simple, widely used industry formula to reach a fast, rough answer, useful early on but not a substitute for a documented case. What actually moves a genuine offer up or down is risk: What Drives a Higher Multiple on a Business Sale sets out the specific factors a buyer weighs — how far the business runs without the current owner, how concentrated its customers and suppliers are, whether earnings are trending up or down across several years, and how much of the operation is actually written down rather than living in the owner’s head. What Is My Business Worth Without Me in It? is the sharpest version of that owner-dependence question on its own. A business that cannot demonstrate any of this on paper gets discounted by default, whether or not anything is actually wrong with it. Some businesses are instead priced off a Revenue Multiple rather than earnings — usually fast-growing or thin-margin operations where revenue is the steadier signal — and Deavo’s answers on What Multiple Do Small Businesses Sell for in Canada? and What Multiple Does a SaaS Business Sell For? go through how each is discussed without pretending a single Canadian number exists to quote. Neither page states one, and no advisor working from a genuinely verified Canadian transaction-multiple dataset should either, because that dataset does not currently exist.

Not every business is priced on a multiple of earnings at all

A business that is not consistently profitable, or that carries more value in its equipment, inventory and real estate than in its cash flow, is generally priced under Asset-Based Valuation instead — the sum of what its individual assets are worth, at fair market value or a discounted liquidation figure, minus what it owes. Getting the equipment side of that number right usually means a genuine Equipment Appraisal from an independent professional, since book value reflects a depreciation schedule chosen for tax purposes, not what a buyer could actually realize for the asset today — the Appraisal Institute of Canada is the professional body behind the accredited property appraisers who do the real-estate half of this work. Where a business owns the real estate it operates from, the two have to be valued and reported separately: Business Valuation vs Real Estate Appraisal explains why one blended figure misprices both the operating business and the building underneath it. A Multiple-Based Estimate vs a Formal Appraisal sets out when a rough industry-range number is good enough for an early conversation and when it genuinely is not — a distinction that matters most exactly when the stakes riding on the figure are highest.

The sector you are in changes which of these drivers actually matters

Every sub-sector page in this library works through the specific mix of drivers a buyer applies inside that industry — the same normalized-earnings-and-risk logic above, weighted differently depending on what actually generates and protects the cash flow. A sample of what that weighting looks like across a range of Canadian small business categories:

Food and drink

• A bar or pub’s number tracks the liquor licence class and how much patio revenue that class actually permits, on top of the beverage program itself — What Is a Bar and Pub Worth? goes through the specific factors.
• What Is a Brewery or Brewpub Worth? and What Is a Brewery Worth? split the same question by format: a taproom-driven operation prices differently than a production brewery selling mainly through wholesale and distribution.
• A café or coffee shop is priced on beverage margin and day-part traffic, discounted for aging espresso equipment and any outstanding gift-card liability — see What Is a Café or Coffee Shop Worth?
• A catering company is priced on the strength of its forward-booked event pipeline rather than its equipment, discounted for how much of that pipeline depends on the owner-chef personally, as What Is a Catering Company Worth? covers.
• A restaurant’s earnings swing harder on small changes in food and labour cost than most retail formats do, which How Much Is My Restaurant Worth? explains.

Hospitality and venues

• A banquet hall or event venue is valued on earnings from room rental, catering and bar service, weighed against how deep its forward-booked calendar is and how much of that calendar’s deposits are still owed in service — What Is a Banquet Hall and Event Venue Worth? sets out the detail.
• A bed and breakfast blends a real-estate valuation with a small income stream, so the number depends heavily on whether a buyer is pricing a home with a business attached or the reverse, per What Is a Bed and Breakfast Worth?
• A campground or RV park is priced on pre-sold seasonal-site revenue and the condition of its water and septic infrastructure, discounted for a short Canadian operating season, as What Is a Campground and RV Park Worth? explains.
• A bowling centre’s value splits between recurring league revenue, its pinsetter and lane equipment, and how much of the total figure is really the large-format real estate underneath it — What Is a Bowling Centre Worth? breaks down the split.

Agriculture and primary production

• A beef cow-calf operation prices the grazing land, the herd’s genetics and calving performance, and the handling infrastructure as three separate pieces, not one blended number — What Is a Beef Cow-Calf Operation Worth? explains why.
• A berry farm’s plantings are priced on age and years of productive life remaining rather than flat acreage, and its market channel carries its own separate risk, covered in What Is a Berry Farm Worth?
• A broiler poultry farm’s number is quota value plus barn-and-equipment value plus operating earnings above what the quota alone would return if simply leased out, as What Is a Broiler Poultry Farm Worth? sets out.
• A cash crop farm splits into land valued against comparable farmland sales, equipment and storage valued at appraised resale, and operating earnings above what the land would return as rent — see What Is a Cash Crop Farm Worth?

Regulated and environmentally sensitive operations

• A cannabis cultivation facility’s worth sits mostly in the federal licence and what it authorizes — canopy capacity, security build quality and wholesale relationships each move the number independently of the real estate, as What Is a Cannabis Cultivation Facility Worth? details.
• A car wash is priced on weather-adjusted earnings, discounted for the tunnel equipment’s remaining useful life and any unresolved discharge-permit issue, and increased where a verifiable membership base makes revenue more predictable — see What Is a Car Wash Worth?

Trades and light manufacturing

• An auto repair shop is generally valued as a multiple of discretionary earnings like most small businesses, but its labour-to-parts revenue mix, environmental history and whether it operates under a franchise banner each move that multiple, per How Much Is an Auto Repair Shop Worth?
• An HVAC business’s multiple depends heavily on how much revenue comes from signed maintenance contracts rather than one-off installs, and on how portable its gas and refrigeration licensing actually is — How Much Is My HVAC Business Worth? goes through both.
• A cabinetry and millwork shop’s number depends on how much of its project pipeline rides on the owner’s personal relationships with builders and designers and how much open warranty exposure sits unresolved, as What Is a Cabinetry and Millwork Shop Worth? sets out.
• A chemical blending and formulation business is only priced once a buyer knows whether it owns its formulations outright or merely toll-blends for others, and whether its site and product registrations actually transfer — see What Is a Chemical Blending and Formulation Business Worth?

Retail and e-commerce

• A convenience store is valued off discretionary earnings like other retail, but the mix between low-margin, high-volume categories such as fuel, lottery and tobacco and higher-margin merchandise moves the multiple more than in most retail formats, as How Much Is My Convenience Store Worth? explains.
• A B2B e-commerce store is discounted for how much of its revenue sits with a small number of accounts and how much of its technical infrastructure would need rebuilding if a key integration failed to transfer — see What Is a B2B E-Commerce Store Worth?

Professional and personal-care practices

• A bookkeeping firm is valued off its recurring fee base rather than any single year’s revenue, and it is mostly other bookkeeping and accounting firms, not outside investors, who actually set the price — What Is a Bookkeeping Firm Worth? explains why that matters.
• A dental practice is valued on earnings adjusted for how much production comes from the owner personally versus associates and hygiene, and increasingly on whether a solo buyer or a consolidating group is looking, per How Much Is My Dental Practice Worth?
• A chiropractic clinic is weighted by how much treatment volume runs through the owner personally, how much of the patient base is on a recurring care schedule likely to continue with a new practitioner, and how diversified the payer mix is, as What Is a Chiropractic Clinic Worth? details.

The goodwill component changes what you actually keep, not just what you’re offered

The portion of a purchase price that exceeds the value of a business’s identifiable assets — its reputation, customer relationships, trained staff and earning capacity — is Goodwill, and in an asset sale it sits on its own line in the purchase price allocation with its own tax treatment, separate from equipment or inventory. How Is Goodwill Taxed When I Sell My Business? goes through how that allocation is actually taxed under the federal income tax rules the CRA administers, and why negotiating the split between goodwill and hard assets matters to both sides of a deal, not just the seller. In a professional practice specifically — a dental, chiropractic or bookkeeping practice among them — Treadstone Law’s commentary on evaluating goodwill in a small business purchase and on goodwill valuation in professional practice sales both flag how much of that goodwill is tied to the outgoing practitioner personally versus the practice itself, which is exactly the owner-dependence question this whole page keeps returning to. A high headline price with an unfavourable allocation between goodwill and assets can leave a seller with meaningfully less after tax than a lower price allocated more favourably — the number on the offer sheet and the number that actually lands in your account are two different conversations.

The buyer on the other side of the table is asking the same question about your business

Everything above describes how a buyer prices earnings and risk, but a buyer is running through the identical exercise on every business they look at. How to Find a Business Worth Buying covers that search from their side: setting criteria, screening candidates, and ruling out weak ones before committing to real due diligence. Two questions come up often enough on the buyer’s side to be worth naming here. Is a Declining Business Ever Worth Buying? works through when a falling trend is already priced in rather than a reason to walk away, and Is a Franchise Worth More Than an Independent Business? explains why neither format is inherently worth more — a franchise typically produces lower discretionary earnings once royalties come off the top, but a proven system and a recognizable brand can offset that for the right buyer. Knowing how a buyer reasons through both is useful context whether the business you own or are looking at falls into either category.

A formal valuation is a different, more defensible answer than an estimate

Everything described above is illustrative reasoning, not an appraisal of any specific business — a genuine number, defensible in a negotiation, a financing application or a dispute, comes from an actual valuation engagement. Do I Need a Professional Business Valuation? sets out when the cost is worth it: a sale price, financing, litigation, a shareholder buyout or an estate are all situations where a documented, credentialed opinion matters more than a quick estimate. The Chartered Business Valuator designation, maintained by the CBV Institute, exists precisely because a defensible number needs to show its reasoning, not just state a conclusion, and Treadstone Law’s own commentary on whether you need a business valuator and on whether it is worth paying for more than one valuation before you list both work through when that level of rigour is actually warranted versus when a lighter opinion will do. If you already have a report in hand, whether from a valuator, a lender or a broker, How to Read a Business Valuation Report walks through what to check before you accept the figure: which method was used and why, what was normalized in the earnings, and whether the reasoning would hold up if a skeptical outsider read it line by line.

More than one owner turns the number into a negotiation among the owners first

A business with more than one owner adds a layer most of the discussion above assumes away: before a buyer’s number matters at all, the owners need to agree on the price they will accept, who leads the process, how proceeds are split, and how decisions get made if they do not fully agree. How Do I Handle a Sale When There Are Multiple Owners? goes through what that agreement needs to cover and why it works best set out in a shareholder agreement well before a genuine buyer is at the table — a buyer can lose interest and walk while the owners are still negotiating with each other, and that stalled window is often more costly than any disagreement over the final figure itself. Where owners cannot agree on a number for an internal buy-in or buyout, Treadstone Law’s commentary on buy-in versus buyout valuation and on how a partner buyout valuation dispute actually gets resolved describes an Ontario shareholder’s starting point; other provinces run their own corporate statute and their own default rules for what happens absent a shareholder agreement, so confirm which regime governs your corporation before assuming any of it applies as described. Selling to a co-owner, a family member or a friend below what an outside buyer would pay is a legitimate choice, but Treadstone Law’s commentary on selling a business below market value to a relative flags tax and fairness considerations distinct from an arm’s-length sale, worth raising with your own advisor rather than assuming the same reasoning carries over.

The number can still move between an accepted offer and the money in your account

An accepted price is not the same as a closed price. A portion of the purchase price is commonly held back for a period after closing — an escrow or holdback against post-closing claims — and part of the price can be structured as a vendor take-back loan the seller carries, or as an earn-in or earn-out tied to the business’s performance after the sale rather than paid entirely at closing. In Ontario, a vendor take-back loan is typically secured against business assets under the provincial personal property security regime; other provinces, including Quebec’s civil-law framework, use their own security mechanism, so confirm how a take-back is actually secured in your province before treating it as equivalent to cash at closing. Each of these structures moves real money later than closing day, and each carries its own risk of not being fully collected if the business underperforms or a dispute arises. None of it changes what the business is worth in principle, but it changes what a seller actually receives and when, which is worth understanding before you compare two offers that look identical on their headline number.