EBITDA Multiples by Industry: Dated Ranges for Private Companies and What Moves Yours

By Andreas Pettersson, Founder, Leaders ADAPT

An owner reads that software companies trade at 24 times EBITDA. He runs a services company with $2 million of EBITDA. He does the arithmetic in the car and arrives at a number that would change his life. The first serious buyer offers four times. He calls it an insult.

It is not an insult. It is a different market. Most published EBITDA multiples by industry describe listed companies. A private company of his size is priced in another room, by other rules.

I have sat on the selling side of that table. I built Arcules from zero to more than 150 people and sold it to Canon, then ran it as Canon's youngest standalone CEO. Now I run Leaders ADAPT for owners of $5 million to $50 million companies, and our exit readiness work starts with the question this page answers: what is a realistic multiple for a company like mine, and what moves it.

What an EBITDA multiple is, and why size picks your table

An EBITDA multiple is the price a buyer pays for the whole company divided by its yearly earnings before interest, taxes, depreciation and amortization. The price in that ratio is enterprise value, the value of the operating business before debt is repaid and spare cash is added back. A company with $2 million of EBITDA that sells for $8 million sold at four times. The owner does not receive $8 million. Debt comes out first.

Below about $2 million of deal value the market changes its ruler. Brokers price small companies on seller's discretionary earnings, SDE, which adds the owner's salary and perks back to profit because the buyer will do the owner's job. Above that line, buyers deduct a market salary for a manager and price on EBITDA. The International Business Brokers Association draws the line at $2 million in its quarterly Market Pulse, and I use the same line here.

So before you look up your industry, look up your size. In private markets the size band moves the multiple more than the industry label does.

EBITDA multiples by size band: IBBA Market Pulse, Q2 2026

The cleanest free and dated source for private companies under $50 million is the Market Pulse survey, run by the IBBA and M&A Source with Pepperdine Graziadio Business School. It asks the advisors who closed deals in the quarter what multiple they closed at. The table below is from the Q2 2026 highlights, published August 2026, with the same quarter a year earlier for comparison.

The step from the $1 million to $2 million band to the next one looks small, 3.1 to 4.0, but the earnings basis changes underneath it. SDE includes your salary. EBITDA does not. The buyer is paying a higher multiple on a smaller number. Do not multiply your SDE by an EBITDA multiple. That is the most common arithmetic error I see in a first call.

The top band pays almost three times the bottom band. A company with $6 million of EBITDA at 5.8 times is worth $34.8 million. The same earnings split across three $2 million companies would be worth about $24 million. Size brings private equity and strategic buyers into the room, and more bidders bid the multiple up.

The year on year movement is a tenth or two of a turn in most bands. The market multiple is not where your value moves. Your risk profile is.

BizBuySell, which tracks smaller main street sales, reports the same size effect. Its Q3 2026 Insight Report puts the average cash flow multiple at 2.30 times for businesses under $1 million of sale price and 3.73 times above it, on 2,132 transactions.

EBITDA multiples by industry: what can be verified and what cannot

Here is the honest state of the data. Private company multiples by industry sit mostly behind paid databases. BVWire, covering the DealStats Value Index, notes that the industry cut is for subscribers only and that the all industry median price to EBITDA was 4.8 times in Q2 2024, down from a 5.0 times peak in 2018. The Pepperdine Private Capital Markets Report, the most cited academic survey of private deal pricing, publishes its headline findings each year. The 2025 edition reported private equity buyers averaging 5.5 times EBITDA for companies with $10 million in earnings. The 2026 edition, published July 2026, gives expected returns rather than multiples: private equity investors want a median 20 percent return on companies with $1 million to $5 million of EBITDA, rising to 25 percent in the middle market. A buyer who needs 20 percent a year cannot pay a 12 times multiple. That return target is the ceiling on your price, whatever your industry.

So I will not give you a table of private multiples by industry that I cannot source. Two things are dated and public.

First, the industry ranking from listed companies. Aswath Damodaran at NYU Stern publishes enterprise value to EBITDA by sector every January. The levels are too high for a private company. The order is not.

Read it as a ranking. Software sits at the top because revenue repeats and margins are high. Auto parts and homebuilding sit at the bottom because demand swings and capital is heavy. A private HVAC contractor will not sell at 17 times because construction stocks do. But a private software company with contracted recurring revenue will sit higher in its IBBA size band than a project based contractor with the same EBITDA, for the reasons the public ranking shows.

Second, the few sector figures BizBuySell publishes for small companies. In its Q3 2026 report, manufacturing businesses sold at an average 3.02 times cash flow, the highest of the sectors it tracks, and restaurants at 2.39 times. Those are main street cash flow multiples, not lower middle market EBITDA multiples, and I include them because they are dated and public.

If a page shows you a tidy grid of private EBITDA multiples by industry with no date, no source and no earnings definition, treat it as decoration. The how much is my business worth page covers the other methods a buyer runs alongside the multiple.

The three things that move your multiple inside the band

A multiple is not a reward for past profit. It is a price on how believable the future profit is without you. Every buyer I have sat across from tested three things, in this order.

Owner dependency. If the top ten customers call your mobile, if you approve every quote, if the bank knows your name and not your controller's, the buyer is not buying a company. He is buying you, and you are leaving. He prices that. The key person risk page has the test I run on it, and the fix takes 12 to 24 months, not a quarter. This is the lever owners underrate most, because the company has always needed them and they think that is what owning one means.

Management team. The buyer's second question is who runs this on the Monday after closing. A second in command who has carried the P&L for two years, a finance lead who closes the books on time, a sales leader who owns the pipeline. Each one the buyer can name takes a risk off the price. What buyers look for in a management team lists the questions they ask the team when you are not in the room. I have been on the buyer's side of that too, and the management interviews told me more than the data room did.

Earnings quality. The third test is whether the EBITDA is real. Private sales use adjusted EBITDA, with one off costs and the owner's above market items added back. Every add back is a claim, and every claim is tested in a quality of earnings review paid for by the buyer. The add backs you cannot prove come off the EBITDA at the full multiple. A $300,000 add back that fails at 4.0 times is $1.2 million off your price.

The three are one thing seen from three sides. At Arcules I once put a number on one engineering manager's leadership style: about $450,000 a year in turnover cost. I told him directly, he changed, and turnover in his group fell from about 20 percent to 8 percent. I did that to run the company, not for a buyer. A buyer would have priced it anyway, because a team that stays is earnings that stay.

A worked example: the same company at two multiples

Take an illustrative services company with $3 million of reported EBITDA. The owner picks the $2 million to $5 million band, applies the 4.0 times median and expects $12 million.

A buyer runs the three tests. The owner is on every major account. There is a controller but no finance leader, and the books close six weeks after month end. Of the $3 million, $400,000 is add backs for a vehicle, family salaries and a "one off" legal cost that has appeared three years running. The quality of earnings review accepts $100,000 of the add backs and strikes $300,000. Adjusted EBITDA is now $2.7 million. The buyer prices the owner dependency and the thin team at the low end of the band, 3.5 times. Offer: $9.45 million, part of it as a two year earnout because the buyer needs the owner to hand over the accounts.

Now the same company 18 months later. A general manager has run the weekly operating meeting for a year and owns the top accounts, with the owner in the background. A fractional CFO has the books closing in ten days and the add backs documented with invoices and a market salary benchmark. Adjusted EBITDA is $2.95 million, because one real add back was recovered and the rest were never claimed. The buyer sees a company that runs without the seller and prices it at 4.5 times, the upper half of the same band. Offer: $13.3 million, more of it in cash at close.

Same industry. Same band. The difference is close to $4 million, and none of it came from the industry table. It came from risk the owner removed. That is the order of work the prepare business for sale page follows.

Where AI fits in the valuation conversation

AI has made the first pass at a valuation nearly free. An owner can feed three years of statements into a model tonight and have an adjusted EBITDA schedule and a range by morning. It gets the owner to the conversation with a number instead of a hope.

Two cautions. First, the model will happily multiply SDE by an EBITDA multiple, or borrow a public software multiple for a private services firm, if you let it. Check the earnings definition behind every number. Second, the three risk tests are judgment calls about people, which is what not to delegate to AI. An AI can tell you that your top three customers are 48 percent of revenue. It cannot tell you whether they would stay if you left. A buyer will ask them.

Where AI earns its place before a sale is in the operating rhythm: a documented system, a weekly scorecard and a knowledge base a new executive can learn from. That is what makes a buyer believe the company runs without the owner. The AI for EOS companies page covers how operating system companies put that in place.

What a higher multiple does not fix

A multiple does not fix a company that is not ready to be sold. I have watched owners spend a year chasing a strategic buyer who might pay six times instead of four, when the company could not survive a quality of earnings review at either price. The books were the problem.

It does not fix the owner's life after closing either. The owner who is the company gets a lower multiple and a longer earnout, then spends two years working for the buyer to earn a price he already thinks was low. If you are selling because you are tired, the answer is a second in command and a management team first, then a sale from strength, or no sale because the company finally runs without you. Leadership team development is where that starts, and it pays whether you sell or not.

And it does not fix a bad deal structure. An earnout at 5.0 times can be worth less than cash at 4.0. The business broker vs M&A advisor page covers who negotiates that. I do not.

Who is on the bench for this

Steve Shaw is the fractional CFO on the Leaders ADAPT bench. Steve has twenty years in finance leadership and does the earnings quality work from the seller's side: clean books, documented add backs, cash discipline, and the numbers conversation with buyers and lenders. He is in the room when the private equity team asks about the one off legal cost.

Thor Legvold is the leadership psychologist on the bench. When the exit read shows that the owner is the company, Thor's work on executive fit and the second in command closes the gap finance can only measure.

Sergey Dmitriev is the fractional CTO and AI systems partner. When the reporting stack or the company knowledge system needs building before a buyer looks, Sergey builds it and trains the leadership team with me.

Every engagement runs through Leaders ADAPT. I take the first call, match the partner, and stay in the room.

EBITDA multiples by industry FAQ

What is a typical EBITDA multiple for a small business?

It depends on the size of the earnings. The IBBA Market Pulse for Q2 2026 reports median multiples of 2.0 times SDE under $500,000 of value, 2.8 times from $500,000 to $1 million, 3.1 times from $1 million to $2 million, then 4.0 times EBITDA from $2 million to $5 million and 5.8 times EBITDA from $5 million to $50 million.

Why do EBITDA multiples differ so much by industry?

A multiple is a price on how believable next year's earnings are. Industries with repeat revenue, high margins and light capital needs, such as software, earn higher multiples. Industries with project revenue, cyclical demand or heavy equipment, such as auto parts or homebuilding, earn lower ones. Inside any industry, size, owner dependency and earnings quality move the number further than the industry label does.

What is the difference between an SDE multiple and an EBITDA multiple?

SDE, seller's discretionary earnings, adds the owner's salary and perks back to profit because the buyer of a small company will do the owner's job. EBITDA deducts a market salary for whoever runs the company. IBBA uses SDE below $2 million of deal value and EBITDA above it. An SDE multiple on the same company is therefore lower than its EBITDA multiple would be.

Are public company EBITDA multiples a fair benchmark for a private company?

No. NYU Stern data for January 2026 puts US listed companies at 19.73 times EBITDA. Private companies between $2 million and $50 million sold at median multiples of 4.0 to 5.8 times in Q2 2026 according to IBBA. Public shares can be sold in seconds, and the companies are far larger. Use the public ranking to compare industries, never to set your own price.

What moves an EBITDA multiple up before a sale?

Three things a buyer tests every time: whether the company runs without the owner, whether a management team can carry it after closing, and whether the earnings survive a quality of earnings review. Each one is a risk the buyer prices. Reduce the risk and the multiple moves, size for size. Add backs you cannot prove come off the EBITDA at the full multiple.

Where can I find private company EBITDA multiples by industry?

Mostly behind paid databases such as DealStats, and in broker reports. The free, dated sources are the IBBA Market Pulse quarterly highlights, which cut by deal size, BizBuySell's quarterly insight report, which gives a few sector cash flow multiples, and NYU Stern's January tables for listed companies by sector. Check the date, the earnings definition and the population before you borrow a number.

How do I estimate my own EBITDA multiple?

Calculate adjusted EBITDA for the last three years with evidence for every add back. Pick the IBBA size band your deal value falls in and take its median as the middle of your range. Then score yourself on owner dependency, management team and earnings quality. Weak on two or more, assume the bottom of the band. Strong on all three, the top. Subtract debt to reach your equity.

Start with the gap, not the number

The IBBA table tells you which room you are in. In Q2 2026 that meant 2.0 to 3.1 times SDE below $2 million of deal value and 4.0 to 5.8 times EBITDA above it. The public tables tell you how your industry ranks, never what you will get. Where you land inside your band comes down to three questions a buyer will ask whether you prepare or not: does this run without you, who runs it after, and is the EBITDA real.

Tomorrow morning, write down your adjusted EBITDA, the add backs you are claiming, and the evidence for each. Then write the names of the three people a buyer would interview without you in the room. If the second list is short, you have found your lever.