What Is Your Markham Business Actually Worth? A Plain-English Valuation Guide

Ask ten owners what their business is worth and most will anchor on one of two numbers: annual revenue, or the amount of money and years they've poured into it. Buyers use neither. If you're one of the many Markham owners thinking about an exit — and CFIB estimates three-quarters of Canadian owners plan to exit within the decade — understanding how value is actually calculated is the highest-leverage hour you'll spend.

This is general information to make you a smarter seller (or buyer), not a substitute for professional advice.

The number buyers care about: SDE

Seller's Discretionary Earnings (SDE) is the total annual financial benefit one working owner takes from the business. It starts with net profit and adds back things a new owner wouldn't necessarily pay for:

• Your own salary and benefits
• Personal expenses run through the business (vehicle, phone, travel)
• One-time costs that won't recur (a lawsuit, a renovation, a one-off equipment purchase)
• Interest and depreciation (financing and paper costs, not operations)

A worked example, with illustrative numbers: a shop shows $42,000 net profit on its statements. The owner also paid herself a $60,000 salary, ran an $8,000 vehicle through the business, and absorbed a $10,000 one-time renovation. Her SDE is roughly $42,000 + $60,000 + $8,000 + $10,000 = $120,000. That — not the $42,000, and not her revenue — is the earning power a buyer is pricing.

This is also why unrecorded cash sales are a seller's own worst enemy: if it isn't in the books, it isn't in the SDE, and it isn't in the price.

From SDE to a price: the multiple

Small businesses generally sell for a multiple of SDE. The honest answer about multiples is that they vary widely — by industry, size, growth, location, and deal terms — and any specific number you read online is a generalization about someone else's business. What actually moves your multiple:

• Owner dependence (the big one). A business that runs without you commands more than one that is you.
• Quality of the books. Accountant-prepared statements and clean tax filings buy trust, and trust buys price.
• The lease. A long, assignable lease at reasonable rent adds value; eighteen months left with an uncooperative landlord subtracts it — sometimes fatally.
• Recurring vs. walk-in revenue. Contracts, memberships, and repeat customers beat foot traffic.
• Customer concentration. If one client is 40% of revenue, your buyer inherits a risk, and prices it in.
• Trend line. Three growing years beat three flat ones; a declining line demands an explanation.
• Staff who stay. Experienced employees willing to continue are part of what's being bought.

Where a professional comes in

For most Main-Street-sized deals, a valuation from an experienced accountant — or, for larger or contested situations, a Chartered Business Valuator (CBV) — pays for itself twice: it grounds your asking price in something defensible, and it hands the buyer's side a document instead of an argument. It matters even more if the sale involves incorporation structures, family transfer, or tax planning around Canada's lifetime capital gains exemption — the rules and limits there are exactly what you pay professionals to get right. You can find local accountants in our directory.

Raising your number before you sell

Valuation isn't fixed — it responds to preparation. If your exit is a year or more away, the same short list keeps coming up:

• Get every dollar into the books, starting now — provable earnings are the product
• Document processes so the business demonstrably runs without you
• Renew or extend your lease before listing, and confirm it can be assigned
• Diversify revenue away from any single dominant customer
• Fix the cosmetic things — buyers do judge the paint

When you're ready to act on the number: our step-by-step guide to selling your Markham business covers confidentiality, buyer qualification, and closing — and you can list your business for sale here. General information only, not financial, tax, or legal advice.