Typical Selling Multiples
Most small businesses sell for roughly 2x to 4x SDE, and mid-market businesses for about 3x to 7x EBITDA. The multiple is the number you apply to earnings to get the sale price — so a business with $300,000 in SDE at a 3x multiple sells for about $900,000. Where your business lands in (or beyond) these ranges depends on risk and quality factors that buyers price carefully.
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What Drives the Multiple
Two businesses with identical earnings can sell at very different multiples. Multiples rise with:
- Recurring or contracted revenue
- Low owner dependency — the business runs without the owner
- Diversified customers — no concentration risk
- Growth trend and healthy margins
- Clean, verifiable financials
- Size — larger businesses generally earn higher multiples
And fall with owner-dependence, customer concentration, declining trends, messy books, and thin margins. See what lowers value.
Multiples by Industry
Multiples vary meaningfully by business type. A few examples from our industry guides:
- HVAC / home services — ~2.5x–5x SDE
- Restaurants — ~1.5x–3x SDE
- Medical spas — ~3x–6x SDE
- Manufacturing — ~3x–6x EBITDA
Industry reflects the underlying risk, recurring-revenue potential, and buyer demand for that type of business.
Why Bigger Businesses Get Higher Multiples
Size itself commands a premium — a phenomenon sometimes called the "size premium." Larger businesses tend to have management teams, more diversified customers, better systems, and lower owner dependency, all of which reduce risk. They also attract more sophisticated buyers (private equity, strategics) who pay up for scale. This is why a business earning $2M in EBITDA often sells at a higher multiple than one earning $300K in SDE, even in the same industry.
Applying Multiples Correctly
Two cautions: always match the multiple to the metric (an EBITDA multiple on an SDE figure gives a wrong answer — see SDE vs. EBITDA), and treat published ranges as starting points, not appraisals. Your actual multiple comes from your specific risk profile and market. A professional valuation determines the right multiple for your business rather than a generic rule of thumb.
Frequently Asked Questions
What multiple do businesses sell for?
Most small businesses sell for roughly 2x to 4x SDE, and mid-market businesses for about 3x to 7x EBITDA. The multiple is applied to earnings to get the sale price, so a business with $300,000 in SDE at 3x sells for about $900,000. The exact multiple depends on risk and quality factors.
What makes a business sell for a higher multiple?
Recurring or contracted revenue, low owner dependency, diversified customers, a growth trend, healthy margins, clean verifiable financials, and larger size all push the multiple up. Owner-dependence, customer concentration, declining performance, messy books, and thin margins push it down.
Do bigger businesses sell for higher multiples?
Generally yes. Larger businesses tend to have management teams, diversified customers, better systems, and lower owner dependency, all of which reduce risk, and they attract more sophisticated buyers who pay up for scale. This size premium means a larger business often sells at a higher multiple than a smaller one in the same industry.
How do multiples differ by industry?
Multiples reflect each industry's risk and recurring-revenue potential. For example, HVAC and home services run about 2.5x to 5x SDE, restaurants 1.5x to 3x, medical spas 3x to 6x, and manufacturing 3x to 6x EBITDA. Industry is a major factor, but the specific business's quality still drives where it lands in the range.
What Multiple Will Your Business Command?
Martin Navarro determines the right multiple for your specific business in a confidential valuation. Know your number, no obligation.
Request a Free Valuation Call or text: 818-633-3254 · 365navarro.martin@gmail.com