M&A Multiples: What Determines What Your Business Is Worth
M&A multiples — the EBITDA multiple applied to value your business — are one of the most-searched topics for founders thinking about a sale. The honest answer is that there is no single multiple that applies to your business. Multiples are a range, not a number, and where your business lands within that range depends on multiple factors that interact in ways that no table can capture. What we can tell you is what the key drivers are — and why the same EBITDA can produce very different values in different hands.
How multiples are derived
Valuation multiples in M&A are not arbitrary — they are a function of expected future cash flows, growth prospects, and the risk associated with those cash flows. A high-growth SaaS business trades at 15x EBITDA because the market believes its cash flows will grow significantly and are highly predictable; a cyclical industrial business trades at 5x EBITDA because its cash flows are more variable and growth prospects are limited. Multiple differences between sectors reflect differences in these underlying return expectations — not arbitrary market conventions.
Sector multiples: indicative ranges for 2026
Technology and SaaS: 12–20x EBITDA (mature, profitable SaaS) or 4–8x ARR (high-growth). Healthcare services: 6–14x EBITDA. Professional services: 5–12x EBITDA. Manufacturing (speciality): 6–10x EBITDA. Financial services: 8–15x EBITDA. Consumer branded: 8–16x EBITDA. Real estate services: 6–12x EBITDA. Recruitment: 7–12x EBITDA. Food and beverage (branded): 10–18x EBITDA. These are indicative ranges for well-positioned businesses — not floor or ceiling values. Specific transactions fall outside these ranges in both directions based on the factors described below.
What drives you to the high end of the range
Businesses that command the highest multiples in their sector share common characteristics: high-quality recurring revenue with low churn; strong growth trajectory (20%+ EBITDA CAGR over 3 years); defensible market position — proprietary products, exclusive relationships, or regulatory moats; management depth beyond the founder; diversified customer base with no concentration above 10–15%; and clean, audited financials with transparent normalisation. The businesses that achieve multiple expansion beyond the sector range are typically those where the buyer sees strategic value — synergies, capabilities, or market position — that justifies paying above the financial return alone.
What drives you to the low end of the range
The most common multiple depressants are: customer concentration above 25% in any single customer; founder dependency — revenue, relationships, or key decisions concentrated in the owner; declining revenue or margins over the last 2–3 years; poor revenue quality — highly transactional, project-based, or dependent on a small number of large contracts; limited management depth or key-person risk; sector cyclicality and limited visibility on future earnings; and the absence of audited financials or a defensible normalisation schedule.
Why a competitive process changes the multiple
The same business presented to two buyers produces two different valuations. A buyer with strategic rationale for the acquisition — synergies, market access, capability acquisition — will pay more than a financial buyer applying a standard multiple. Having multiple buyers simultaneously engaged, and allowing them to compete with each other, forces buyers to put their best price forward rather than starting from a conservative position. This is the most important insight about multiples: they are not fixed by the market — they are influenced by the quality of the process you run.
Key takeaways
M&A multiples are a range, not a point — sector provides the range; your specific characteristics determine where you land.
High-quality recurring revenue, strong growth, and management depth drive businesses to the upper end of their sector multiple range.
Customer concentration, founder dependency, and declining trends are the most common multiple depressants.
Strategic buyers pay higher multiples than financial buyers — access to the right buyer universe is the most important variable.
A competitive process with multiple simultaneous buyers is the most reliable way to achieve the upper end of the multiple range.
Related M&A terms
Continue building your M&A knowledge with these related guides.
Considering selling your business?
Understanding the mechanics is preparation. The conversation about your specific business — what it is worth in the current market, what a sale process would look like, and whether the timing is right — is a different one. We offer an initial consultation at no charge and without obligation. If it is not the right time, we will tell you that too.