You want one number you can defend — to a buyer, to a lender, and to yourself. Work through these in the order below and you will end with a number, know which multiple justifies it, and be able to explain why an independent opinion might land somewhere else entirely.
What you'll be able to decide
STAGE ONE OF FOUR
Every valuation starts with an earnings figure, and small differences in how it is built move the final number more than the argument over the multiple ever will.
Guide
Valuing a Canadian owner-operated businessStart here: the SDE-times-multiple method most owner-operated Canadian deals actually use, and the adjusters that move you inside the band.
Definition
Seller's discretionary earnings (SDE)SDE, not EBITDA, is the earnings base most deals under roughly $1M are priced and financed against — the definition this path leans on.
Definition
EBITDA: what it measures when a business changes handsAbove that size the earnings base switches to EBITDA. Know which one your deal is actually using before you compare it to anything.
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How an owner's salary gets normalized in a valuationThe single adjustment most likely to move your number: what a buyer pays a replacement manager, not what you paid yourself.
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Should below-market related-party rent be adjusted for EBITDA?A second common adjustment, easy to miss when the business rents from a related party below market.
Definition
EBITDA bridge: how a target’s earnings get pricedThe bridge that walks reported earnings to the adjusted figure a buyer actually prices, add-back by add-back.
STAGE TWO OF FOUR
Before you defend a number, understand how two honest people can build different ones from the same set of books.
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Why the same business can show two different EBITDA numbersTwo accounting frameworks can turn an identical trading year into two different EBITDA figures — see which one your target actually uses.
Case file
The same business, two frameworks, two EBITDAsA real version of that gap: the same trading year, two frameworks, EBITDA $1,100,000 apart between buyer and seller.
Definition
Multiple of earningsOnce the earnings base is settled, the multiple applied to it is where market judgment enters — the same multiple means different things on SDE, EBITDA or enterprise value.
Definition
Enterprise valueWhat a multiple actually prices before cash and debt are settled at closing.
Definition
Equity valueWhat you are actually paid once enterprise value is adjusted for the target’s cash, debt and the closing working-capital peg.
STAGE THREE OF FOUR
A number that only you believe rarely survives a buyer’s, a lender’s, or the CRA’s own review.
Definition
Chartered Business Valuator (CBV)The designation behind a valuation built to survive scrutiny — what a CBV is actually required to have done to earn it.
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Does the CSBFP require an independent appraisal?When a lender’s own rules force an independent appraisal regardless of what you and the buyer have already agreed.
Case file
An appraisal that came in under the agreed priceWhat happens when that appraisal disagrees with the negotiated number — and which figure the lender actually funds against.
Ask an Expert
Is a minority stake valued as a straight fraction of the company?Whether a partial stake is worth a straight fraction of the whole, or a discount — a valuation call, not a legislated one.
STAGE FOUR OF FOUR
The last two pieces: the legal standard your number may be tested against, and the case this path opened with.
Definition
Fair market valueThe legal standard your number may eventually be tested against, particularly on any related-party leg of the deal.
Case file
Two valuations four hundred thousand apartA formal CBV Institute Practice Standards report and an informal broker opinion on the same business, exactly $400,000 apart — and why only one held up.
Once you have a defensible number, the next place it gets tested is diligence — see which findings actually justify moving it.
Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.
No pitch, no listings. One email when the first report lands.
