Business Valuation Multiples by Industry (2026)

Most private companies sell for a multiple of earnings, and the multiple depends on three things: how you earn (owner-operated vs. professionally managed), how big you are, and how predictable your revenue is. As a rough 2026 guide: small owner-run businesses trade around 1.5–3x SDE (seller's discretionary earnings); larger, professionally managed companies trade around 3–5x EBITDA; asset-light or high-growth businesses can command 0.5–2x revenue; and businesses with strong recurring revenue — SaaS especially — can reach 8x revenue or more. Those are starting points, not answers. Your actual multiple is set by the quality of your earnings and how well they survive a buyer's diligence.

Below is how to think about which multiple applies to you.

SDE vs. EBITDA vs. revenue — which multiple applies?

SDE (Seller's Discretionary Earnings) is used for smaller, owner-operated businesses. It adds the owner's salary and perks back to profit, because a new owner could take that compensation themselves. Typical range: 1.5–3x.
EBITDA is used for larger businesses that run on a management team rather than a single owner. Typical range: 3–5x for lower-middle-market companies, higher for scale, sector leadership, and growth.
Revenue multiples are used when profit is being deliberately reinvested into growth (common in software and other high-growth models). Range varies enormously — 0.5–2x for most businesses, 8x+ for high-retention recurring-revenue software.

The transition from an SDE multiple to an EBITDA multiple is one of the biggest value unlocks a founder can engineer: it usually means building a business that runs without you.

What moves your multiple up

Two companies in the same industry with the same earnings can sell for very different multiples. The premium goes to businesses with:

Recurring revenue and high net revenue retention.
Low customer concentration — no single customer that could sink the business.
Clean, diligence-ready financials — three-statement models, documented revenue recognition, reconciled books.
A management team that operates independently of the founder.
Documented, credible growth levers a buyer can actually pull.

What drags your multiple down

Founder dependence — if the business is the founder, buyers discount heavily or structure the deal around earnouts.
Messy or inconsistent financials — the fastest way to invite a re-trade after the LOI.
Customer or supplier concentration.
Declining or lumpy revenue with no clear explanation.

Notice that several of these are not about the business itself — they are about how legible the business is to a buyer. That is the part you can fix before you go to market, and it is often worth more than another year of growth.

Industry context

Multiples cluster by sector because of how buyers perceive durability and margin. Software and healthcare services tend to command premiums for recurring revenue and defensibility; capital-intensive and highly cyclical industries tend to trade lower. But within any sector, the spread between a diligence-ready company and a messy one is wide — often wider than the spread between sectors. Preparation, not just industry, sets the price.

Frequently asked questions

What is a good EBITDA multiple for a small business?
For lower-middle-market companies, 3–5x EBITDA is a common range, with premiums for recurring revenue, growth, and market position. Very small owner-run businesses are usually valued on SDE (1.5–3x) instead.

Why do SaaS companies get such high multiples?
Recurring subscription revenue with high retention is predictable and scalable, so buyers pay for future cash flows rather than just current profit — pushing multiples well above traditional businesses.

How do I increase my company's valuation multiple?
Build recurring revenue, reduce customer concentration, make the business run without you, and get your financials to diligence-ready standard before going to market.

Is revenue or EBITDA multiple better for valuing my company?
It depends on your model. Profitable, mature businesses are usually valued on EBITDA; high-growth businesses reinvesting profit are often valued on revenue.

Want to know what your business would actually fetch — and what's holding the number down? A Zenith Transaction Readiness Audit pressure-tests your financials against how buyers and investors value companies, so you fix the multiple-killers before anyone else sees them. Book a Transaction Readiness Audit →