What Multiple Will Your Business Sell For
Once you’ve estimated your business’s value, the next step is understanding the multiple that drives it. Multiples are how buyers translate earnings into enterprise value—and the difference between five times and eight times EBITDA can mean millions.
In this video, Kirk Michie explains how multiples actually work in private company deals, what factors influence them, and how to benchmark your business against current market activity.
What Multiple Will Your Business Sell For?
When founders start exploring a sale, they often hear that their company is worth a “multiple” of EBITDA or revenue. But what does that really mean—and how do you know what’s realistic for your business?
Understanding Multiples
Multiples are shorthand for how buyers value a business. Like the price-to-earnings ratio on a public stock, a multiple expresses what a buyer is willing to pay per dollar of earnings or revenue. In most private transactions, value is based on a multiple of EBITDA—earnings before interest, taxes, depreciation, and amortization—or, for recurring models, a multiple of revenue.
Typical Ranges by Size
Under $1M EBITDA: often a lifestyle business, usually trades under 5× EBITDA.
$2M–$5M EBITDA: typically trades between 5× and 8× (possibly higher for high growth, strong IP, or recurring models).
Above $5M–$10M EBITDA: begins approaching public company ranges, potentially into double-digit multiples.
Professional services firms—law, accounting, consulting—may trade instead at 1–3× revenue, depending on structure and client stability.
Where to Find Real Data
Founders can research through platforms like Crunchbase, PitchBook, GF Data, or S&P Capital IQ, but even those may not provide a definitive answer. The best insight often comes from conversations with active investment bankers or business brokers who work deals in your size and sector.
What Drives Your Multiple Up or Down
Multiples reflect risk and growth potential. Factors that raise multiples include:
High recurring or contracted revenue
Strong margins and defensible IP
Clean financials and scalable systems
Large, diversified customer base
Conversely, concentration, volatility, or dependence on the owner can pull multiples down.
The “right” multiple depends on size, structure, growth, and market sentiment. Understanding where your business fits helps you plan, benchmark, and ultimately negotiate from a position of strength.
