EBITDA Multiples by Industry: How to Read Them
Why published EBITDA multiple tables mislead owners, what actually sets the multiple within an industry, and where to find sourced, dated multiples for your own sector.
Industry averages are the most quoted and least useful number in private company valuation. Here is what a multiple is actually pricing, why the spread within an industry is wider than the spread between industries, and where to find figures with a source attached.
What EBITDA multiple does my industry trade at?
the spread within an industry is usually wider than the difference between industries
. A multiple prices the risk, growth and transferability of the earnings, not the trade on the door. Two companies in the same sector with identical EBITDA are routinely valued several turns apart, and the reasons are always the same handful of factors.
We do not publish a blanket table of multiples across every industry, because most of the tables circulating online carry no source, no date, no size band and no definition of the earnings measure, and owners make decisions on them. Where we publish a figure, it is sourced, dated and tied to a defined sub-sector. Everything else on this page is about how to read a multiple properly, which is more useful than another unsourced number.
What the multiple prices", value:
Size effect", value: "Larger companies attract higher multiples in the same sector
Before you use a multiple you have read or been told, ask these seven questions. Most quoted figures fail at least three of them, and a figure that fails them is not evidence.
Which earnings measure is it applied to?
Seller's discretionary earnings, adjusted EBITDA, or reported EBITDA. An SDE multiple is structurally lower than an EBITDA multiple for the same company, because SDE is the larger number. Comparing the two directly is the most expensive error in small company valuation.
What size band does it describe?
A multiple drawn from transactions in the tens of millions does not apply to a company with two million dollars of EBITDA. Buyer pools, financing availability and risk all change with size, and the multiple moves with them.
Is it a private transaction or a listed company?
Listed company trading multiples are public, dated and verifiable, which makes them useful as direction. Private companies transact below them, reflecting size, liquidity, concentration and owner dependence.
How old is it?: Multiples move with credit conditions and with the acquisition appetite of the platforms active in a sector. A figure with no date attached could describe a very different market from the one you would sell into.
Multiples move with credit conditions and with the acquisition appetite of the platforms active in a sector. A figure with no date attached could describe a very different market from the one you would sell into.
Is it enterprise value or equity value?
Multiples are normally quoted on enterprise value, which is before debt is deducted and before the working capital adjustment. The gap between that and what a seller actually receives is frequently larger than owners expect.
Does it describe the sub-sector or the headline industry?
Within building services, statutory inspection work and discretionary installation work are priced differently. Within healthcare, a practice with recurring patient revenue is priced differently from a project-led services business. The sub-sector is where the useful information is.
What is the source?: A named filing, a dated transaction, a published report. A number with no source behind it is an opinion, and it should not be the basis for a decision about your largest asset.
A named filing, a dated transaction, a published report. A number with no source behind it is an opinion, and it should not be the basis for a decision about your largest asset.
The largest single driver in field service and compliance businesses. Revenue under a written, assignable agreement with indexation is valued differently from the same dollars re-won each year, because the buyer is acquiring a schedule rather than a sales effort.
Customer concentration: Concentration rarely removes earnings; it reduces the multiple applied to them and pushes structure toward deferred consideration. Buyers are pricing the possibility that the relationship was personal rather than institutional.
Concentration rarely removes earnings; it reduces the multiple applied to them and pushes structure toward deferred consideration. Buyers are pricing the possibility that the relationship was personal rather than institutional.
Scale: Larger companies attract higher multiples in the same sector. They reach a wider buyer pool, support more debt financing, and carry less single-point risk. This is why growth before a sale can be worth more than the earnings it adds.
Larger companies attract higher multiples in the same sector. They reach a wider buyer pool, support more debt financing, and carry less single-point risk. This is why growth before a sale can be worth more than the earnings it adds.
Margin stability: Three consistent years beat one strong year. A peak in the trailing twelve months invites closer scrutiny of the prior two, and a buyer will usually price the trend rather than the peak.
Three consistent years beat one strong year. A peak in the trailing twelve months invites closer scrutiny of the prior two, and a buyer will usually price the trend rather than the peak.
Management depth: A business that runs without the owner is an asset. One where the owner sets pricing, signs off technically and holds every relationship is a job with a payroll, and the multiple reflects that.
A business that runs without the owner is an asset. One where the owner sets pricing, signs off technically and holds every relationship is a job with a payroll, and the multiple reflects that.
Evidence quality: Records that reconcile to filed returns, documented add-backs, margin by revenue line and a working capital history. Weak evidence does not only reduce confidence, it moves the negotiation onto the buyer's analysis.
Records that reconcile to filed returns, documented add-backs, margin by revenue line and a working capital history. Weak evidence does not only reduce confidence, it moves the negotiation onto the buyer's analysis.
In compliance-led sectors, accreditation is generally a license to operate rather than a premium. Its absence is a discount; its presence is not, on its own, an uplift.
Who is buying in your sector right now
An active consolidator executing a stated acquisition strategy pays differently from an opportunistic individual buyer. The buyers present in your process are part of your multiple, which is why buyer selection is a pricing decision.
A named source and a capture date
A defined sub-sector rather than a headline industry
A stated size band close to your own
The earnings measure specified, SDE or adjusted EBITDA
Enterprise value basis made explicit
A range, with the drivers of position within it explained
An undated table of industry averages with no source
A figure quoted from a forum post or an anonymous discussion thread
A broker's marketing claim about what similar businesses achieve
A listed company multiple applied directly to a private company
A revenue multiple used in place of an earnings multiple
A number that describes companies several times your size
We publish multiples by sub-sector in our valuation guides, each with the basis stated, and listed company benchmarks separately. Follow the guide closest to your own trade rather than using a cross-industry average.
Dental practices: See the dental practice multiples guide
See the plumbing and drainage multiples guide
See the fire sprinkler and suppression guide
Passive fire protection: See the passive fire protection guide
See the maintenance contracts guide
HVAC, United States: See the US HVAC business valuation guide
See the public market benchmarks hub
If your sub-sector is not listed, it is because we do not yet hold figures we can source and date for it, and we would rather say so than publish an average. A written valuation of your own company is more useful than any table in any case, because it prices your revenue mix rather than your industry.
What is a typical EBITDA multiple for a small business?
Small owner-operated companies are usually priced on seller's discretionary earnings rather than EBITDA, and at lower multiples than mid-sized companies in the same sector, because the buyer pool is narrower and the earnings are less transferable. Rather than anchor on a general figure, establish which earnings measure applies to your company and then look at sourced evidence for your sub-sector and size band.
Why do published multiple tables vary so much?
Because they measure different things. Some describe listed companies, some describe private transactions, some use SDE and some use EBITDA, some cover a size range far above the lower middle market, and many carry no date. Two tables can both be accurate about entirely different populations, which is why the source and definitions matter more than the number.
Do listed company multiples apply to my business?
Not directly. Listed companies are larger, more diversified, professionally managed and liquid, and they transact at higher multiples for those reasons. They are valuable as a directional and dated reference for what the market pays for a type of revenue, and as evidence of which sub-sectors held margin through a downturn. They are not a price for a private company.
Can improving margin raise my multiple?
Improving margin raises the earnings the multiple is applied to, which raises value directly. Whether it raises the multiple itself depends on how it was achieved. Better pricing discipline, higher first-time fix rates and improved labor recovery are genuine and buyers credit them. Cutting marketing, deferring vehicle replacement or thinning the technician base is recognized as deferred cost and is not paid for.
How do I find comparable transactions for my sector?
Private transaction data is incomplete because most deals are not published, and what is published often omits the earnings basis. Useful sources are the acquisition disclosures of listed consolidators in your sector, their investor presentations, and advisers who are actually transacting in that market. Treat anything without a named source as background rather than evidence.
Does the multiple change if I sell to a competitor?
It can. A strategic buyer with overlapping operations may be able to justify more than a financial buyer, because they can see revenue and cost synergies. They will not pay for those synergies unless there is another credible party at the table, which is why running several buyers in parallel matters more to the final multiple than the identity of any one of them.
What should I do first?", answer:
Establish your normalized earnings and your revenue mix, then look at sourced evidence for your sub-sector. The free written valuation report does the first part and applies the second, and it names the specific factors holding your multiple down.
Selling a Business in the US
How EBITDA multiples are set for private US companies, what moves them within an industry, and where to find sourced multiples by sub-sector.
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Questions owners ask before they start
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