Answer guide
Business valuation.
EBITDA multiples, adjusted EBITDA, industry benchmarks, and the levers that move your number - for private businesses between $1M and $100M.
How do you value a small or mid-sized business?
The default method for private businesses under $100M is an EBITDA multiple. Take trailing twelve month EBITDA, apply owner add-backs (owner comp above market, one-time expenses, personal costs run through the business) to get adjusted EBITDA, then multiply by an industry-appropriate multiple. Lower middle market businesses typically transact between 3x and 7x adjusted EBITDA. Deals that clear 7x usually have recurring revenue, low customer concentration, low owner dependence, and durable growth.
What is a good EBITDA multiple for my industry?
Rules of thumb (adjusted EBITDA, 2025–2026): home services 3x–5x, professional services 3.5x–6x, SaaS 4x–10x+ depending on ARR growth and net retention, e-commerce 3x–5x, healthcare services 5x–8x, industrial services 4x–7x, marketing agencies 3x–5x, HVAC/plumbing roll-up plays 5x–8x. Actual multiples move with deal size, growth, customer mix, and financing environment. A defensible range requires real comps from your industry and your size band.
What is adjusted EBITDA?
Adjusted EBITDA is earnings before interest, taxes, depreciation, and amortization, adjusted for non-recurring and non-operating items. Common add-backs: owner compensation above a market wage for the role, one-time legal or restructuring costs, discretionary personal expenses run through the business, non-recurring project revenue, and non-cash items. Every add-back must be defensible in diligence - buyers will challenge each line.
What lowers my business valuation?
Customer concentration (any single customer over 20% of revenue), owner dependence, messy or restated books, declining revenue, high working-capital intensity, thin gross margins, key employee risk, and off-market related-party contracts. Each of these compresses the multiple, sometimes by 1–2 full turns.
How do I increase my business valuation before selling?
Fix the compressors - reduce customer concentration below 20%, hire away from owner dependence, clean and normalize the books, document processes so the business is transferable, and lock in multi-year contracts. Twelve to twenty-four months of intentional prep can move a multiple by 1–3 turns, which on a $10M business is $1M–$3M of enterprise value.
How is a SaaS business valued differently?
SaaS is valued off ARR and growth-adjusted revenue multiples rather than EBITDA. Rule of thumb for private SaaS $1M–$25M ARR: 4x–8x ARR for mature, profitable, low-churn businesses; 3x–5x ARR for slower growth or higher churn; 8x+ for rapid growth with strong net retention. EBITDA multiples apply once growth slows and the business is run for cash.
Next step
Get a defensible range on your business.
Free seller assessment call. We run the numbers, share comparable transactions, and lay out how to raise the multiple before you sell.