Business Valuation Multiples by Industry: SDE Multiples, EBITDA Multiples and Revenue Multiples by Sector

Pick the wrong base and the number is wrong before you start. The rule of thumb is simple: if the owner works in the business, use SDE. If a paid manager runs it, use adjusted EBITDA after charging a market salary for that role.

The bridge between the first two is the owner's compensation. Take SDE, subtract what it would cost to hire someone to do the owner's job, and you have adjusted EBITDA. On a business with $400,000 of SDE and a $110,000 market salary for the owner's role, EBITDA is $290,000. At 2.7x SDE that is $1,080,000; at 3.7x EBITDA it is $1,073,000. Same business, same price, two different looking multiples. If you want the mechanics of the add-back, the walkthrough is in how to calculate SDE, and the line by line comparison sits in SDE vs EBITDA.

Every owner who has read that restaurant chains trade at four times revenue has wondered why their own broker said half of one. This table answers it with numbers. For the 16 industries where a private price to revenue multiple from closed US sales can be matched to a listed sector, it shows both, side by side, with the gap measured.

The median discount is 68%. A private business is paid roughly a third of what the listed market pays for the same dollar of revenue in the same industry, and in restaurants and software it is closer to a tenth. That is not a market failure and it is not something a better broker fixes. It prices four differences a listed company does not have: you cannot sell your business on Tuesday afternoon at a quoted price, your revenue sits on far fewer customers, your earnings depend on one person showing up, and your buyer is funding the purchase with a personal guarantee rather than someone else's index fund.

Three rows deserve a caveat rather than a headline. Grocery and convenience lands at a 0% gap, which is a coincidence of two independent datasets both arriving at 0.49x, not a finding. Auto repair shows only 17%, but the public comparable is auto parts manufacturing, a genuinely different business that happens to be the nearest listed match. Dental and medical practices show no discount at all, and the reason is the comparable rather than the practices: the listed healthcare support services sector is dominated by distributors and benefit managers running huge revenue on a 3.87% EBITDA margin, so its 0.46x EV/Sales describes a wholesaler, not a clinic. Where the private and public businesses genuinely resemble each other, in trucking, hotels, education and construction services, the gap lands between 58% and 80% with reassuring consistency.

The practical use of this is defensive. When a buyer or an online tool anchors your value to a public comparable, you now know the size of the correction, and when a listed competitor announces an acquisition at 12x EBITDA, you know why your own offer arrived at 3x SDE. If you want the private revenue multiples on their own, without the public market next to them, they are laid out on revenue multiples by industry.

Used carefully, a multiple answers one question well: given what businesses like mine have sold for, is the number in front of me inside the range or outside it. That is genuinely useful, and it is most of what a first valuation needs to do. What it cannot do is replace the work of normalizing your own earnings, which is where the real number lives and where most of the disagreement in a deal actually happens.