How to Value a Business in BC: The Ultimate Guide for 2026

Valuing a business is part art, part science. In British Columbia, determining the fair market value of a small to medium enterprise (SME) requires moving beyond simple revenue multipliers and digging deep into normalized cash flow.

Understanding SDE vs. EBITDA

The foundation of business valuation is determining true profitability. In the SME market, we use two primary metrics:

• Seller's Discretionary Earnings (SDE): Used for businesses under $2M in value. SDE includes the net profit plus the owner's salary, benefits, and any personal expenses (add-backs) run through the business. It represents the total financial benefit to a single owner-operator.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. This is used for larger businesses ($2M+) with management teams in place, where the buyer is typically an investment group or corporate acquirer rather than an owner-operator.

Applying the Right Industry Multiple

Once you calculate SDE or EBITDA, you apply an industry multiplier. This multiplier reflects the risk of the business. Lower risk = higher multiple.

• Restaurants/Retail: 1.5x to 2.5x SDE (Higher risk, lower barrier to entry)
• Trades/Construction: 2.5x to 4.0x SDE (Medium risk, skilled labor required)
• B2B SaaS / Recurring Revenue: 4.0x to 6.0x EBITDA (Lower risk, highly scalable)

Value Drivers and Detractors

Two businesses with the exact same SDE can sell for drastically different prices based on qualitative factors:

• Customer Concentration: If one client makes up 40% of your revenue, your multiple drops significantly due to risk.
• Owner Reliance: If the business cannot run without the founder, it's worth less. Businesses with strong middle management command premium valuations.
• Lease Terms: A great business with an expiring lease is almost unsellable.

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Regulatory Notice: Gurjit Ghai is a licensed REALTOR® with Rexara Realty Inc., regulated by the BC Financial Services Authority (BCFSA). This article is for general information purposes only and does not constitute legal, financial, accounting, mortgage, or tax advice. Market data, financing terms, and regulatory programs change frequently — verify all figures and program terms directly with the relevant institution, lender, or qualified professional before making any decision. Reading this article does not create an agency relationship.

Forward-Looking Statements: Market projections are based on current data and assumptions. Future market conditions may differ.

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