Business Valuation Multiples by Industry
Published 8/6/2026
Quick answer
A valuation multiple is the number you multiply your earnings by to estimate your business’s value. Small businesses commonly sell for about 2 to 4 times SDE, with an average near 2.5 times, while larger businesses are valued on EBITDA at roughly 4 to 9 times. The exact multiple depends on your industry, your size, and how risky the business looks to a buyer.
Key takeaways
- A multiple turns yearly earnings into an estimated business value.
- Smaller businesses use SDE multiples; larger businesses use EBITDA multiples.
- Industry sets the rough band, but your specific business decides where you land in it.
- Deal size is one of the biggest factors: bigger businesses earn higher multiples.
- The ranges below are general market data; only a real valuation gives your true number.
What is a valuation multiple?
A valuation multiple is simply a shortcut. Instead of projecting decades of future profit, the market settles on a number that reflects what buyers will pay for each dollar of earnings in your industry. Multiply your earnings by that number and you have an estimated value. For example, a business with $300,000 in SDE and a 3 times multiple is worth roughly $900,000. To choose the right earnings figure first, see SDE vs EBITDA.
SDE multiples vs EBITDA multiples
Which multiple applies depends on how your business is measured. Smaller, owner-operated businesses are valued on SDE, and their multiples are lower because the owner is part of the engine. Larger businesses are valued on EBITDA, and their multiples are higher because they are more stable, more systematized, and easier to step into.
As a general guide based on recent market data:
- Small businesses on SDE: commonly about 2 to 4 times, with an overall average near 2.5 times.
- Lower middle market on EBITDA: roughly 4 to 9 times, depending on industry and quality.
- Larger middle-market businesses: often 6 to 10 times or more, thanks to scale and systems.
General ranges by industry
The table below shows general 2026 ranges to give you a sense of where different sectors tend to land. Treat them as a starting point, not a quote. Your own multiple can sit above or below these bands depending on your specific business.
| Industry | Typical EBITDA multiple | Notes |
|---|---|---|
| Home and trade services | 4 to 6 times | Steady demand; premium for recurring contracts |
| Professional services | 4 to 7 times | Higher when not owner-dependent |
| Manufacturing | 5 to 7 times | Equipment and backlog support value |
| Healthcare services | 5 to 9 times | Premium for stable, insured revenue |
| Restaurants and retail | 2 to 4 times | Thinner margins, more owner-dependent |
| Technology and SaaS | 6 to 15 times | Recurring revenue earns the highest multiples |
Note: Main Street businesses are more often quoted on SDE (about 2 to 4 times) than on EBITDA. These figures reflect general market data for 2026 and vary widely by region, size, and business quality.
Why two businesses in the same industry sell for different multiples
Industry sets the band, but the business sets the position within it. The same value drivers that affect every sale decide whether you are at the top or bottom of your range:
- Size. Deal size is one of the single biggest factors. A larger business in the same industry almost always earns a higher multiple.
- Owner dependence. A business that runs without the owner is worth a premium.
- Recurring revenue. Predictable, contracted income lifts the multiple; one-off sales lower it.
- Customer concentration. Relying on one or two big clients pulls the multiple down.
- Margins and growth. Strong, growing margins, with a cash-flow margin around 20% or better, push toward the top of the range.
- Clean financials and systems. Documented operations reduce risk and reward you with a higher number.
How to find your real multiple
A published range cannot tell you your number, because it cannot see your books, your customers, or your systems. A professional valuation can. Bridge builds valuations using a Comparable Companies and Transactions analysis, applying the multiples from real, recent deals that match your business, then presents the result as a range with a confidence level. A certified valuation is a flat $1,999, delivered in 3 to 5 business days, and accepted by banks, buyers, and courts. If you just want a quick read, start with a free estimate.
If your multiple is lower than you would like, the value drivers above are your to-do list. Bridge can help you raise your value before you sell.
Where published ranges come from
It helps to know what a multiple range actually is. It is not a rule set by anyone. It is a summary of what buyers have recently paid for businesses that look broadly similar, drawn from databases of completed transactions.
That has two consequences. The first is lag: reported deal data describes the market of six to eighteen months ago, so ranges move slowly even when conditions change quickly. The second is spread. A published band usually covers the middle of a distribution and quietly excludes the outliers at either end, which is why a business can legitimately sell outside its stated range.
Ranges are also sensitive to how the sample is defined. A category as broad as professional services covers a two-person bookkeeping practice and a fifty-person engineering firm, and those two businesses do not trade at the same multiple. The narrower and more comparable the sample, the more useful the range.
How the multiple is actually applied
A multiple is applied to an earnings figure, and the two have to match. An EBITDA multiple goes with EBITDA; an SDE multiple goes with SDE. Mixing them is the fastest way to produce a number that no buyer will recognize.
It is also worth being clear about what the resulting figure represents. In most small business sales the multiple produces an enterprise value, which assumes the business transfers free of debt and with a normal level of working capital in place. Outstanding loans come off that figure, and any shortfall in working capital is typically adjusted for at closing.
The practical effect is that the headline number and the amount that reaches your bank account are rarely the same. Understanding the gap early prevents an unpleasant surprise late in the process.
Moving up within your range
You cannot change the industry you are in, but the position you occupy within its range is largely within your control, and the difference between the bottom and top of a band is often a third or more of the sale price.
The highest-leverage changes tend to be structural rather than financial. Reducing owner dependence by documenting processes and moving key relationships to named staff addresses the risk buyers weigh most heavily. Converting one-off work into contracted or repeat revenue changes how predictable your earnings look. Reducing reliance on a single large customer removes the concern that keeps buyers awake.
None of these happen in a quarter. A year or two of deliberate work is realistic, which is why the owners who achieve the top of their range are usually the ones who started before they had a buyer in front of them.
Find out what you’re worth.
Frequently asked questions
What is a business valuation multiple?
It is the number you multiply your earnings by to estimate value. For example, $300,000 in SDE at a 3 times multiple suggests a value near $900,000.
What is a good multiple for a small business?
Small businesses commonly sell for about 2 to 4 times SDE, with an average near 2.5 times. Larger businesses valued on EBITDA often see 4 to 9 times or more.
Why do multiples vary by industry?
Different industries carry different levels of risk, growth, and demand. Stable sectors with recurring revenue, like healthcare and technology, earn higher multiples than thin-margin, owner-dependent sectors.
What raises my multiple the most?
Reducing owner dependence, building recurring revenue, diversifying customers, and keeping clean financials. See how to value a small business for the full picture.
How do I find the exact multiple for my business?
Published ranges are only a guide. A certified valuation uses real comparable sales to determine the multiple that actually applies to your business.
Find the multiple that applies to your business
Stop guessing with industry averages. Get a free estimate, or order a certified valuation grounded in real comparable sales.
About Bridge. Bridge helps small business owners value, scale, and exit with confidence. Certified valuations are prepared by ABV and AICPA credentialed experts, delivered for a flat $1,999 in 3 to 5 business days, and are SBA-compliant. The team has served 300+ businesses and supported more than $1B in M&A transactions. Learn more at bridge.financial.
This article is educational and not financial, legal, or tax advice. For a number specific to your business, request a certified valuation.
