Estimate the fair market value of your Indian SME or MSME business using the EBITDA multiple method — the standard used by acquirers, investors, and business brokers in India.
How to Value an Indian Business
Business valuation uses three primary approaches. EBITDA multiple is the most reliable for profitable businesses:
EBITDA = Net Profit + Interest Expense + Tax + Depreciation + Amortization. For Indian SMEs, you can approximate: take your net profit from the P&L, then add back any loan interest, depreciation on assets, and advance tax payments. Owner's salary above market rate is also often added back for valuation purposes.
Key value drivers: (1) Consistent revenue growth (2%+ YoY premium per point of growth above sector average), (2) Recurring/contract revenue vs. one-off sales, (3) Diversified customer base (no single customer >20% of revenue), (4) Strong brand and IP, (5) Documented processes and systems that don't depend on the founder personally, (6) Clean books and audited financials.
Goodwill is implicitly included in the EBITDA multiple — a business with strong brand, loyal customers, and proprietary systems commands a higher multiple. Asset-based valuation separately calculates tangible net assets and adds goodwill as an explicit line item. For M&A purposes, goodwill is the premium paid above book value of net assets.
