Glossary · Reading the business
In short
In business valuation, a factor is a multiplier applied to a company's earnings or revenue to estimate its market value. Different industries and business types have varying factors.
You'll often hear business brokers or sellers use a 'multiple' or 'factor' of EBITDA or SDE to justify a purchase price. Understand that this is a starting point, not a definitive valuation. Your lender's appraisal will use more robust methods to determine fair market value, often starting with a factor but adjusting for specific business risks and opportunities.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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