Industry multiples

What Is a Good EBITDA Multiple for My Industry?

EBITDA multiples serve as the universal language of business valuation. But what counts as 'good' depends entirely on your industry, size, and growth profile. Here is how to benchmark your business.

April 8, 20266 min read

Industry Multiple Ranges

The short answer to "what is a good EBITDA multiple?" is: it depends entirely on context. A 4x multiple might be excellent for a landscaping company but deeply undervalued for a SaaS business. Here are current ranges across major sectors:

Technology/SaaS: 8-15x
Healthcare services: 6-10x
Professional services: 4-7x
Manufacturing: 4-7x
Distribution/logistics: 4-6x
Construction/trades: 3-5x
Restaurants/food service: 3-5x
Retail: 3-5x
Personal services: 2-4x

These ranges represent the middle 50% of transactions. Exceptional businesses trade above these ranges, while underperformers trade below.

Size Premiums

Within any industry, larger businesses command higher multiples. This "size premium" reflects reduced risk, better management infrastructure, and greater buyer demand. A rough framework:

Under $500K EBITDA: 2-4x
$500K - $1M EBITDA: 3-5x
$1M - $3M EBITDA: 4-6x
$3M - $5M EBITDA: 5-7x
$5M - $10M EBITDA: 6-8x
Over $10M EBITDA: 7-12x+

This size premium exists because larger businesses have more diversified revenue, deeper management teams, and greater access to institutional capital.

Factors That Push Multiples Higher

Regardless of industry, certain characteristics consistently command premium valuations:

Recurring revenue: Subscription or contract-based revenue reduces uncertainty
High growth rate: Businesses growing above 15% annually attract premium buyers
Low customer concentration: No single customer represents more than 10% of revenue
Strong margins: Above-average profitability signals competitive advantage
Minimal owner dependency: The business runs without the owner's daily involvement
Defensible market position: Brand recognition, patents, or regulatory barriers

How to Use Multiples Effectively

Multiples are starting points for valuation, not conclusions. They should be used alongside other methods like DCF analysis and asset-based approaches. When negotiating, present industry multiple data to support your position, but be prepared to discuss why the specific business may warrant a premium or discount to the average. The most productive valuation conversations focus on the specific characteristics that drive where a business falls within the industry range, rather than arguing about the range itself.

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