Methodology
How Erbelo calculates the valuation, the handover readiness, the fit score and the financing figures. Every number on this page is read directly from the code that runs the product.
- Indicative, not a formal valuation: a screening estimate to start the conversation early.
- Transparent: every factor and weight is published here, and every report shows its own calculation.
- Tested: each module has automated tests that pin down its behavior.
- Sourced: market statistics come from cited primary sources.
How we check
- Before publishing, the owner uploads their latest financial statement or management accounts.
- A person at Erbelo checks revenue and owner earnings in the profile against the document. Only then does the listing go live, marked "Figures verified".
- The document is deleted after the decision. Only the result is kept.
- If revenue or earnings later change by more than 5%, we check again, and the listing goes offline until then.
- Successors can have their financing and qualification checked the same way; owners see it as a badge.
The check confirms that the figures match the statement provided. It is not due diligence, an audit or a formal valuation.
1. Valuation
Value = owner earnings × (industry multiple + Σ adjustments), at least the liquidation value of the equipment; shown as low / mid / high, rounded to 5,000
Exhibit 1
Base multiples of owner earnings, by industry and market
Low / mid / high
| Industry | United States | Germany |
|---|---|---|
| Carpentry & joinery | 2.0 / 2.6 / 3.2 | 1.8 / 2.4 / 3.0 |
| Construction & remodeling | 1.9 / 2.5 / 3.1 | 1.7 / 2.3 / 2.9 |
| Roofing | 2.2 / 2.8 / 3.4 | 2.0 / 2.6 / 3.2 |
| Painting & decorating | 1.8 / 2.3 / 2.8 | 1.6 / 2.1 / 2.6 |
| HVAC | 2.4 / 3.0 / 3.7 | 2.1 / 2.7 / 3.3 |
| Plumbing | 2.2 / 2.8 / 3.4 | 2.0 / 2.6 / 3.2 |
| Electrical contractor | 2.2 / 2.8 / 3.4 | 2.0 / 2.6 / 3.2 |
| Metal fabrication | 2.4 / 3.0 / 3.6 | 2.2 / 2.8 / 3.4 |
| Landscaping | 1.8 / 2.3 / 2.9 | 1.6 / 2.1 / 2.7 |
| Auto repair | 2.0 / 2.5 / 3.0 | 1.8 / 2.3 / 2.8 |
| Bakery | 1.6 / 2.1 / 2.6 | 1.4 / 1.9 / 2.4 |
| Butcher & deli | 1.5 / 2.0 / 2.5 | 1.3 / 1.8 / 2.3 |
| Restaurant & café | 1.4 / 1.9 / 2.4 | 1.2 / 1.7 / 2.2 |
| Hotel & inn | 2.0 / 2.6 / 3.2 | 1.8 / 2.4 / 3.0 |
| Catering | 1.6 / 2.1 / 2.6 | 1.4 / 1.9 / 2.4 |
| Retail store | 1.6 / 2.1 / 2.6 | 1.4 / 1.9 / 2.4 |
| Optician | 1.8 / 2.3 / 2.9 | 1.6 / 2.1 / 2.7 |
| Wholesale & distribution | 2.2 / 2.8 / 3.4 | 2.0 / 2.6 / 3.2 |
| Car dealership | 1.6 / 2.1 / 2.6 | 1.4 / 1.9 / 2.4 |
| E-commerce | 2.4 / 3.0 / 3.8 | 2.2 / 2.8 / 3.6 |
| Medical practice | 1.5 / 2.0 / 2.6 | 1.3 / 1.8 / 2.4 |
| Dental practice | 1.6 / 2.2 / 2.8 | 1.4 / 2.0 / 2.6 |
| Pharmacy | 2.0 / 2.6 / 3.2 | 1.8 / 2.4 / 3.0 |
| Physical therapy & wellness | 2.4 / 3.0 / 3.8 | 2.2 / 2.8 / 3.5 |
| Home care & nursing | 2.4 / 3.0 / 3.7 | 2.2 / 2.8 / 3.5 |
| Veterinary practice | 2.0 / 2.6 / 3.2 | 1.8 / 2.4 / 3.0 |
| Tax & accounting firm | 2.0 / 2.6 / 3.2 | 1.8 / 2.4 / 3.0 |
| Law firm | 1.5 / 2.0 / 2.6 | 1.3 / 1.8 / 2.4 |
| Engineering firm | 2.0 / 2.6 / 3.2 | 1.8 / 2.4 / 3.0 |
| Architecture firm | 1.6 / 2.1 / 2.7 | 1.4 / 1.9 / 2.5 |
| Insurance agency | 2.4 / 3.0 / 3.8 | 2.2 / 2.8 / 3.6 |
| Marketing & design agency | 1.8 / 2.4 / 3.0 | 1.6 / 2.2 / 2.8 |
| Business services | 2.2 / 2.8 / 3.5 | 2.0 / 2.6 / 3.2 |
| Cleaning & janitorial | 1.8 / 2.3 / 2.8 | 1.6 / 2.1 / 2.6 |
| Hair & beauty salon | 1.2 / 1.7 / 2.2 | 1.0 / 1.5 / 2.0 |
| Gym & fitness studio | 1.6 / 2.1 / 2.7 | 1.4 / 1.9 / 2.5 |
| Education & driving school | 1.8 / 2.4 / 3.0 | 1.6 / 2.2 / 2.8 |
| Security services | 1.8 / 2.3 / 2.9 | 1.6 / 2.1 / 2.7 |
| Property management | 2.4 / 3.0 / 3.6 | 2.2 / 2.8 / 3.4 |
| IT services | 2.4 / 3.0 / 3.8 | 2.2 / 2.8 / 3.4 |
| Software & SaaS | 2.8 / 3.5 / 4.5 | 2.6 / 3.3 / 4.3 |
| Manufacturing | 2.5 / 3.1 / 3.8 | 2.3 / 2.9 / 3.5 |
| Printing | 1.6 / 2.1 / 2.6 | 1.4 / 1.9 / 2.4 |
| Logistics & transport | 2.0 / 2.6 / 3.2 | 1.8 / 2.4 / 3.0 |
| Other | 1.8 / 2.4 / 3.0 | 1.6 / 2.2 / 2.8 |
Illustrative ranges in the spirit of public main-street rules of thumb; German businesses slightly lower (smaller buyer pool, conservative financing). To be calibrated with transaction data before launch.
Exhibit 2
Adjustments to the multiple
| Factor | Rule |
|---|---|
| Dependence on you | Owner dependence (0–10): up to 3 no deduction, then −0.09 per point |
| Customer concentration | Revenue share of the top 3 customers: −0.10 per 10 percentage points above 25% |
| Years in business | Years in business: < 5 → −0.30; 5–9 → 0; 10–24 → +0.15; ≥ 25 → +0.30 |
| Revenue trend | Revenue over the last 3 years: grown (> 10%) → +0.20; about the same → 0; shrunk (> 10%) → −0.30 |
| Size | Owner earnings: < 75,000 → −0.30; 75,000–149,999 → −0.10; 150,000–499,999 → 0; ≥ 500,000 → +0.20 |
Floors: no multiple below 0.8×; the value is never below the liquidation value of the equipment (70% of today's value). Equipment and stock are part of the multiple and are not added on top. If owner earnings are zero or negative, the range is 50–90% of the asset value.
Exhibit 3
Worked example: a carpentry workshop in Bavaria
Owner earnings €340,000, revenue €1,900,000, founded 1991, owner dependence 6/10, top-3 customers 30%, revenue over the last 3 years: Grown (more than 10%), equipment €420,000.
| Base multiple (carpentry, Germany) | 2.40× |
| Dependence on you | −0.27 |
| Customer concentration | −0.05 |
| Years in business | +0.30 |
| Revenue trend | +0.20 |
| Size | ±0.00 |
| Sum of adjustments | +0.18 |
| Resulting multiple (mid) | 2.58× |
| Indicative value (mid) | €875,000 |
| Range | €675,000 – €1,080,000 |
| Value ÷ revenue | 0.46× |
Source: KfW Research, January 9, 2026.
Plausibility check: KfW reports that German SME owners planning a succession target on average 1.2× annual revenue (median 0.6×). The example lands at 0.46× revenue, close to the median.
Limits
- A screening for small, owner-run businesses, not a valuation under IDW S1, the German crafts standard (AWH) or a full DCF.
- The basis is owner earnings (SDE, including the owner's pay), as is usual for broker valuations of small businesses. Private equity investors and German chambers often use earnings after a market salary for a manager (close to EBITDA), so the report also shows the multiple of those earnings.
- The value is cash-free and debt-free. Working capital, non-operating real estate and one-off items are not included.
- The multiples are illustrative ranges and will be calibrated with transaction data before launch.
- Owner earnings are self-reported; before publishing, Erbelo checks the figures against the latest financial statement.
2. Handover readiness
Seven factors, 100 points. Each factor rises linearly between the thresholds shown. The three factors with the largest gap become the owner's top actions.
Exhibit 4
Factors and weights
| Factor | Max. points | Full points when … / zero points when … |
|---|---|---|
| Runs without you | 25 | Dependence 0/10 … 10/10 |
| Profitability | 15 | Owner-earnings margin ≥ 20% … ≤ 5% |
| Customer spread | 15 | Top-3 share ≤ 25% … ≥ 80% |
| Planning ahead | 15 | 3–5 years ahead (15) · 1–3 years (10) · < 1 year (4) |
| Mentoring | 10 | ≥ 12 months of mentoring … none |
| Track record | 10 | ≥ 15 years in business … ≤ 2 years (2 points) |
| Team | 10 | ≥ 8 employees … none (1 point) |
| Σ | 100 |
Levels: 75–100 ready to hand over, 50–74 on track, below 50 early days.
3. Fit score
Five factors with fixed weights. Every factor is shown to both sides with its reason.
Exhibit 5
Factors and weights
| Factor | Weight | How it's scored |
|---|---|---|
| Skills & industry | 30 | Industry fit 60% (own trade 1.0, wanted industry 0.7, other 0) + experience 25% (full at 8 years) + leadership 15% (full at 3 years); experience from other trades counts half |
| Region | 20 | Preferred region 1.0 · open to anywhere 0.8 · same country, other region 0.35 · other country 0 |
| Financial fit | 25 | Own funds vs. realistic equity need 45% + debt coverage of the business 35% + price within budget 20% |
| Timing | 10 | Gap between owner's and buyer's timeline: ≤ 6 months 1.0 · ≤ 12 0.7 · ≤ 24 0.4 · more 0.15 |
| Values | 15 | Share of the owner's wishes the buyer commits to (keep team, keep name, stay local, sell to an employee) |
| Σ | 100 |
Dealbreakers: if the business is outside every industry the buyer knows or wants, or the buyer has less than 35% of the money they realistically need, the score is capped at 45. Scores below 50 are not shown.
The score is a suggestion. Whether two people talk is decided only by them (no automated decision within the meaning of Art. 22 GDPR).
4. Financing and debt coverage
Price = buyer's own funds + seller note + bank loan. Monthly payments use the standard annuity formula. Like a bank, we check what is left for the loan payments after the successor's salary and taxes.
Monthly payment = P × r ÷ (1 − (1 + r)^−n), with P = principal, r = monthly rate, n = months
Available for loans = owner earnings − successor's salary − taxes; taxes = tax rate × (owner earnings − salary − interest in year 1)
Debt coverage = available for loans ÷ yearly loan payments
Traffic light: green ≥ 1.50×, yellow ≥ 1.25×, red below. Many lenders expect at least about 1.25×.
Exhibit 6
Default assumptions (editable in every deal room)
| Assumption | United States | Germany |
|---|---|---|
| Bank interest rate | 10.5% | 5.5% |
| Bank loan term | 10 years | 10 years |
| Seller note interest rate | 6% | 4% |
| Seller note term | 5 years | 5 years |
| Seller note share of price | 10% | 15% |
| Minimum own funds (matching) | 10% | 10% |
| Successor's salary | $75,000 | €60,000 |
| Tax rate (estimate) | 25% | 30% |
Sources
- 1 KfW Research, “Nachfolge-Monitoring Mittelstand 2025: Pläne für Geschäftsaufgaben wachsen erneut – Kaufpreisvorstellungen deutlich gestiegen (Fokus Volkswirtschaft Nr. 526, Dr. Michael Schwartz)”, January 9, 2026. KfW SME Panel, 23rd wave, 13,079 SMEs, fieldwork Feb 10 – Jun 20, 2025 (GfK, advised by ZEW). Extrapolated to 3.87 million SMEs. www.kfw.de/PDF/Download-Center/Konzernthemen/Research/PDF-Dokumente-Fo…
- 2 Zentralverband des Deutschen Handwerks (ZDH), “Das AWH-Verfahren zur Bewertung von Handwerksbetrieben”, AWH-Handbuch V5.3, October 22, 2025. www.zdh.de/ueber-uns/fachbereich-gewerbefoerderung/das-awh-verfahren-z…