EBITDA Multiples for Small Businesses – 2023
Following our recent meta-analysis of EBITDA multiples by industry, our research team conducted a study to analyze how the economic downturn of Q3-Q4 2022 has impacted EBITDA multiples for small businesses in 2023. In this report, we give average EBITDA multiples paid for small businesses, breaking down the data by industry as well as the most important considerations for private equity and strategic acquirers: employee turnover level, last 12 months revenue growth, and recurring vs. non-recurring revenue.
NOTE: If you’re exploring selling your business, see our report on the Top M&A Advisory Firms in the US. |
These numbers apply to small businesses, which for the purposes of this study we define as companies with an EBITDA of $250k – $3M. For an analysis of EBITDA multiples for larger companies, see our broader report on the subject.
Moreover, this data reflects M&A activity in the industry today, however company owners may find the multiple they’re offered for their business varies based on many other factors, including the business’s customer concentration, competitive advantages, and strength of management team; and the strategic goals of the potential acquirer.
EBITDA Multiples for Small Businesses – 2023
Industry | Employee Turnover | Last 12 Months Revenue Growth | |
Low | High | ||
Accounting | High | 3.6x | 6.4x |
Low | 3.9x | 7.7x | |
Addiction Treatment | High | 2.1x | 2.5x |
Low | 2.3x | 3.9x | |
Automotive | High | Non-recurring Revenue: 2.1x Recurring Revenue: 2.4x |
Non-recurring Revenue: 3.2x Recurring Revenue: 3.9x |
Low | Non-recurring Revenue: 2.5x Recurring Revenue: 2.7x |
Non-recurring Revenue: 4.2x Recurring Revenue: 4.7x |
|
Aviation | High | Non-recurring Revenue: 2.1x Recurring Revenue: 2.6x |
Non-recurring Revenue: 3x Recurring Revenue: 3.9x |
Low | Non-recurring Revenue: 2.4x Recurring Revenue: 2.5x |
Non-recurring Revenue: 3.9x Recurring Revenue: 4.3x |
|
B2B SaaS | High | Non-recurring Revenue: 2.4x Recurring Revenue: 2.5x |
Non-recurring Revenue: 4.1x Recurring Revenue: 6.1x |
Low | Non-recurring Revenue: 2.5x Recurring Revenue: 2.9x |
Non-recurring Revenue: 4.7x Recurring Revenue: 8x |
|
Biotech | High | Non-recurring Revenue: 3.3x Recurring Revenue: 4.2x |
Non-recurring Revenue: 5.5x Recurring Revenue: 6.4x |
Low | Non-recurring Revenue: 3.5x Recurring Revenue: 4.6x |
Non-recurring Revenue: 6.1x Recurring Revenue: 7.7x |
|
Commercial Insurance | High | Non-recurring Revenue: 2.8x Recurring Revenue: 3.1x |
Non-recurring Revenue: 3.7x Recurring Revenue: 4.4x |
Low | Non-recurring Revenue: 3.2x Recurring Revenue: 3.5x |
Non-recurring Revenue: 4.1x Recurring Revenue: 5.4x |
|
Construction | High | Non-recurring Revenue: 2.2x Recurring Revenue: 2.5x |
Non-recurring Revenue: 3x Recurring Revenue: 3.3x |
Low | Non-recurring Revenue: 2.3x Recurring Revenue: 2.6x |
Non-recurring Revenue: 2.8x Recurring Revenue: 4.1x |
|
Cybersecurity | High | Non-recurring Revenue: 2.6x Recurring Revenue: 3.1x |
Non-recurring Revenue: 4.7x Recurring Revenue: 6.2x |
Low | Non-recurring Revenue: 2.9x Recurring Revenue: 3.6x |
Non-recurring Revenue: 4.8x Recurring Revenue: 7.1x |
|
eCommerce | High | Non-recurring Revenue: 2.8x Recurring Revenue: 4x |
Non-recurring Revenue: 4.5x Recurring Revenue: 6x |
Low | Non-recurring Revenue: 4x Recurring Revenue: 5.1x |
Non-recurring Revenue: 5.4x Recurring Revenue: 7x |
|
Engineering | High | 4.4x | 7.3x |
Low | 5.1x | 10.5x | |
Entertainment | High | Non-recurring Revenue: 2.1x Recurring Revenue: 2.6x |
Non-recurring Revenue: 4.1x Recurring Revenue: 5.3x |
Low | Non-recurring Revenue: 2.1x Recurring Revenue: 3.2x |
Non-recurring Revenue: 4.1x Recurring Revenue: 5.6x |
|
Environmental & Clean Energy | High | Non-recurring Revenue: 2.1x Recurring Revenue: 2.5x |
Non-recurring Revenue: 3.8x Recurring Revenue: 4.6x |
Low | Non-recurring Revenue: 2.6x Recurring Revenue: 3.1x |
Non-recurring Revenue: 5.3x Recurring Revenue: 6.5x |
|
Financial Services | High | Non-recurring Revenue: 2.2x Recurring Revenue: 2.4x |
Non-recurring Revenue: 2.8x Recurring Revenue: 3.4x |
Low | Non-recurring Revenue: 2.5x Recurring Revenue: 2.6x |
Non-recurring Revenue: 2.8x Recurring Revenue: 3.6x |
|
Fintech | High | Non-recurring Revenue: 3.1x Recurring Revenue: 3.3x |
Non-recurring Revenue: 5.4x Recurring Revenue: 8x |
Low | Non-recurring Revenue: 3.6x Recurring Revenue: 4.2x |
Non-recurring Revenue: 6.1x Recurring Revenue: 9.3x |
|
Healthcare | High | Non-recurring Revenue: 2.4x Recurring Revenue: 2.8x |
Non-recurring Revenue: 3.5x Recurring Revenue: 4.1x |
Low | Non-recurring Revenue: 2.7x Recurring Revenue: 3x |
Non-recurring Revenue: 4x Recurring Revenue: 4.5x |
|
Higher Education | High | N/A | N/A |
Low | 2.9x | 4.7x | |
Hotels & Resorts | High | 4.2x | 5.6x |
Low | 5.1x | 7.3x | |
HVAC | High | Non-recurring Revenue: 1x Recurring Revenue: 1.8x |
Non-recurring Revenue: 2.8x Recurring Revenue: 3x |
Low | Non-recurring Revenue: 2.1x Recurring Revenue: 2.2x |
Non-recurring Revenue: 3.3x Recurring Revenue: 3.6x |
|
Industrial IoT | High | Non-recurring Revenue: 4.1x Recurring Revenue: 4.6x |
Non-recurring Revenue: 6.8x Recurring Revenue: 7.9x |
Low | Non-recurring Revenue: 5.1x Recurring Revenue: 5.5x |
Non-recurring Revenue: 8.4x Recurring Revenue: 9.6x |
|
IT & Managed Services | High | Non-recurring Revenue: 2.4x Recurring Revenue: 2.9x |
Non-recurring Revenue: 4.6x Recurring Revenue: 5.8x |
Low | Non-recurring Revenue: 3.5x Recurring Revenue: 4x |
Non-recurring Revenue: 5.4x Recurring Revenue: 6.9x |
|
Law Firms & Legal Services | High | Non-recurring Revenue: 1.7x Recurring Revenue: 2.1x |
Non-recurring Revenue: 2.5x Recurring Revenue: 3.4x |
Low | Non-recurring Revenue: 2.1x Recurring Revenue: 2.5x |
Non-recurring Revenue: 2.8x Recurring Revenue: 4.1x |
|
Manufacturing | High | Non-recurring Revenue: 2.5x Recurring Revenue: 2.8x |
Non-recurring Revenue: 3.6x Recurring Revenue: 4x |
Low | Non-recurring Revenue: 3.1x Recurring Revenue: 3.5x |
Non-recurring Revenue: 4.2x Recurring Revenue: 5.1x |
|
Oil & Gas | High | Non-recurring Revenue: 2.4x Recurring Revenue: 3.1x |
Non-recurring Revenue: 3.5x Recurring Revenue: 4.1x |
Low | Non-recurring Revenue: 3x Recurring Revenue: 3.4x |
Non-recurring Revenue: 4x Recurring Revenue: 4.5x |
|
Pharmaceutical & Supplement | High | 4x | 6.5x |
Low | 5.1x | 7.4x | |
Real Estate | High | Non-recurring Revenue: 1.6x Recurring Revenue: 2x |
Non-recurring Revenue: 3x Recurring Revenue: 3.7x |
Low | Non-recurring Revenue: 2x Recurring Revenue: 2.4x |
Non-recurring Revenue: 3x Recurring Revenue: 3.8x |
|
Software Development | High | Non-recurring Revenue: 1.9x Recurring Revenue: 2.7x |
Non-recurring Revenue: 3x Recurring Revenue: 3.7x |
Low | Non-recurring Revenue: 2.1x Recurring Revenue: 3x |
Non-recurring Revenue: 3.3x Recurring Revenue: 3.8x |
|
Staffing & Recruiting | High | Non-recurring Revenue: 2.4x Recurring Revenue: 3x |
Non-recurring Revenue: 4.1x Recurring Revenue: 4.5x |
Low | Non-recurring Revenue: 2.8x Recurring Revenue: 3.3x |
Non-recurring Revenue: 4.7x Recurring Revenue: 5.3x |
|
Transportation & Logistics | High | 2.9x | 4.3x |
Low | 3.1x | 5x |
EBITDA Multiples for Small Businesses: Additional Considerations
Understanding the average EBITDA multiple for your industry provides you with valuable information when attempting to understand your company’s valuation in a potential sale. However, there are other valuation models acquirers use. The following sections outline the most popular valuation models for small businesses.
Alternative Valuation Models for Small Businesses
One of the most important factors to consider when outlining your proposal is your EBITDA multiple. While many assume M&A deals have fixed earnings, they can be much more fluid than basing your deal on the company’s EBITDA multiple.
The table below outlines the most common valuation models in M&A deals:
Valuation Model | Description | Ideal Business Types |
EBITDA Multiple | The number of years worth of a company’s current earnings the owner is willing to accept, in a lump sum today, in exchange for transferring ownership of their company | Small businesses that have been consistently profitable, with revenue rising reliably over time |
Seller’s Discretionary Earnings Multiple | The number of times worth of the owner’s income from a company the owner is willing to accept, in a lump sum today, in exchange for transferring ownership of that company | Professional services firms, medical and legal practices |
Revenue Multiple | The number of years worth of a company’s total sales the owner is willing to accept, in a lump sum today, in exchange for transferring ownership of their company | Small businesses that are growing quickly but not yet profitable |
Asset Multiple | The number of times worth of a company’s current assets the owner is willing to accept, in a lump sum today, in exchange for transferring ownership of their company | Companies that have a lot of associated physical assets (e.g. real estate or automotive) |
The key takeaway of this table is that EBITDA may not be the ideal valuation model for your company. For example, a small company might think they are getting a steal with a 4.2x EBITDA valuation, but in reality, they might earn far more from a 2x revenue valuation. Your M&A advisor should disambiguate this issue and others for you.
Who Are You Selling To?
We’ve already written extensively on this subject, but the prospective buyer in your deal will offer greater multiples or amounts depending on what their respective goals for the deal are. The two most common types of buyers are:
- Strategic Buyers: Industry-experienced buyers purchasing 100% of your company with the intentions of either a) absorbing it into their operations or b) turning it into a cash generator for their company. Strategics often provide more payout for the initial sale and allow business owners to walk away once the deal is complete.
- Private Equity Buyers: Financial institutions purchasing your company with the intention of growing it over time before reselling it as part of a larger portfolio. Private equity has a larger payday overall since owners must stay on and work harder while the PE firm grows their company.
Owners selling their company will also see modulation in their expected valuation multiples depending on who they are selling to. For example, a law firm might see an offer for 3.1x EBITDA from a strategic buyer but a 4x EBITDA offer from a private equity firm which expects being able to sell that company again at a profit. In this sense, the multiple itself becomes less important since a company is likely to get more or less depending on who they decide to sell to.
Conclusion
Just as important as calculating your valuation multiple is creating a relationship with prospective buyers to get feedback. The two most common methods are running a formal deal process or giving the right strategic buyer an exclusive opportunity to purchase your company. The former is generally the better practice for getting the highest offer, but not always.
If you have questions, I’m happy to speak as a fellow owner who has sold several businesses. You can contact me through this site or via my email below.

Evan Bailyn is a bestselling author and award-winning speaker on the subjects of SEO and thought leadership. Contact Evan here.