Industry-average EBITDA multiples are a starting point, not an answer — the multiple that actually applies to your business depends on size, growth rate, and how closely you resemble the comparable transactions the average was built from.
Step 1: Start with the industry range
Find the typical EV/EBITDA range for your sector (SaaS 15–30×, B2B software 8–15×, manufacturing 5–8×, services 4–7×, as a general guide) as your starting bracket.
Step 2: Adjust for size
Smaller businesses systematically trade at lower multiples than larger ones in the same sector — a $1M EBITDA business commonly sells at a meaningful discount to a $20M EBITDA business in the same industry, because buyers pay a premium for scale, management depth, and lower key-person risk.
Step 3: Adjust for growth rate
A business growing 30%+ annually typically commands a multiple well above the sector median; flat or declining EBITDA pulls the multiple toward the bottom of the range or below it. Growth rate is usually the single largest driver of where within the range a specific business lands.
Step 4: Adjust for concentration and dependency risk
Heavy customer concentration (a few clients driving most revenue), key-person dependency (the business can't run without the founder), or thin recurring revenue all pull the multiple down relative to peers, since they represent risks a buyer inherits.
Step 5: Cross-check with EV/Revenue
If EBITDA is small or volatile, an EV/Revenue multiple provides a useful sanity check — calculate enterprise value both ways and see whether the two estimates roughly agree. A large divergence usually means one of your assumptions (margin trajectory, growth durability) needs revisiting.
Frequently asked questions
Where do I find real comparable transaction multiples? Industry M&A advisory reports, sector-specific business brokers, and (for public company comparables) financial data providers are the standard sources — a business broker familiar with your specific niche is often the fastest path to a realistic number.
Does a higher multiple always mean a better outcome for the seller? Only combined with the actual EBITDA figure — a high multiple on a small EBITDA base can still produce a lower total valuation than a modest multiple on a much larger EBITDA base.
Use the EBITDA Multiple Calculator to convert your EBITDA and chosen multiple into an estimated enterprise and equity value.