What Is a Good EBITDA Multiple? Ranges by Size and Industry

A good EBITDA multiple is one that matches your company's size, industry, growth, and risk, and in practice that usually means 3x to 6x EBITDA for small businesses and 8x to 12x or more for larger, higher-quality companies. There is no single "good" number in the abstract. A 4x multiple can be excellent for a small local firm and disappointing for a fast-growing software company. What makes a multiple good is whether it reflects the real drivers of your business, so the useful question is not "what is a good multiple" but "what multiple should mine command, and why."

Typical EBITDA multiple ranges

Multiples rise with company size because larger businesses are seen as less risky, more durable, and easier to finance. As a broad guide:

• Very small businesses (under about 1 million USD EBITDA) often see 3x to 5x, and many are valued on SDE instead of EBITDA at this scale.
• Small to mid-sized businesses (roughly 1 million to 5 million USD EBITDA) commonly see 4x to 7x.
• Larger mid-market companies (above about 5 million USD EBITDA) frequently see 7x to 10x.
• High-quality or high-growth companies can reach 10x to 12x or more, especially with recurring revenue and strong margins.

These are starting points, not promises. Your actual multiple depends on how your business scores on the drivers below and on what comparable companies actually sold for. If your business is small and owner-run, you may be better served by the SDE multiple approach, since EBITDA and SDE carry different multiples.

Industry changes the baseline

Industry sets the neighborhood a multiple lives in. Software and recurring-revenue businesses command the highest multiples because their earnings are sticky and scalable. Asset-light service businesses sit in the middle. Businesses with thin margins, heavy capital needs, or cyclical demand sit lower.

What pushes your multiple up

Within any industry range, specific traits move your multiple toward the top of the band:

• Recurring or contracted revenue that a buyer can count on repeating.
• Growth, since buyers pay more for earnings that are rising.
• Healthy, stable margins that show pricing power and cost control.
• Customer diversity, so no single client can sink the business.
• Low owner dependence, with documented systems and a capable team.
• Clean, verifiable financials that survive a buyer's due diligence.

What pushes your multiple down

The same list in reverse drags a multiple toward the bottom of the range or below it. Customer concentration, declining or erratic sales, thin margins, heavy dependence on the owner, messy books, and looming risks such as a key contract up for renewal all reduce what a buyer will pay. Two businesses with identical EBITDA can command very different multiples entirely because of these factors, which is why a raw multiple without context is nearly meaningless.

Why a range beats a single number

Even the best multiple estimate is a range, not a fixed figure. Suppose your business earns 800,000 USD in EBITDA. A 4x to 6x range implies roughly 3.2 million to 4.8 million USD, and where you land inside that spread depends on the drivers above and on the specific buyers at the table. Reporting a range is honest about the uncertainty every valuation carries, and it gives you a realistic target rather than a false precision. Grounding that range in real comparable sales is what keeps it credible.

How to estimate your own multiple

To get a defensible EBITDA multiple, start with your industry baseline, adjust up or down for your growth, margins, revenue quality, and owner dependence, and then cross-check against comparable sales in your size band. Pairing the multiple with a discounted cash flow view, explained in DCF valuation, adds a second opinion that rewards durable, growing cash flow. If you are preparing to sell, the levers in valuation before selling show how to earn a higher multiple before you go to market.

Estimate versus certified appraisal

A multiple you calculate yourself gives an educational estimate suitable for planning and negotiation, always expressed as a range. It is not a certified appraisal. If you need a valuation for a legal, tax, or lending matter, engage a credentialed appraiser who can produce a signed, defensible report.

Businessappraisal estimates your multiple by combining your normalized EBITDA with industry benchmarks, comparable sales, and a discounted cash flow, then explains which drivers moved your number up or down. The result is an educational estimate as a range, produced in minutes. See how business valuation works.