The FNDRS Playbook · PB02 · Positioning
The multiple range: where your EBITDA multiple lands
An EBITDA multiple range is the band of multiples every sector trades within, and where buyers place a business in it is decided by evidence. Small, owner-dependent, concentrated businesses sit at the bottom; larger, systematized, diversified, growing ones sit at the top.
Does every industry have its own multiple range?
Your industry has a range. Where you land is decided by evidence.
Every sector trades within a band of EBITDA multiples. Businesses at the bottom of the band are small, owner-dependent, and concentrated. Businesses at the top are larger, systematized, diversified, and growing.
The band is public knowledge. What most founders do not know is which end they are at, or why.
You sell once. They buy for a living.
Every sale of a founder-led business is a negotiation between a first-timer and a professional. Each chapter of the playbook closes part of that gap.
Read the asymmetryThe figure
What puts a business at the top of the range?
Buyers put a business at the top of the range when management runs it and it is diversified, recurring, documented, and growing; one re-categorized as technology-enabled, a platform, or a scarce asset can go beyond it. On a scale of EBITDA multiples from 3.0x to 10.0x, the typical lower-middle-market range runs from about 4.5x to about 7.5x.
| Where it lands | Multiple | What buyers see |
|---|---|---|
| Low | About 4.5x | Owner-dependent. Concentrated. Unaudited. Under $2M of EBITDA. |
| Mid | About 6.0x | Second-tier management. Some recurring revenue. Clean books. |
| High | About 7.5x and up | Management runs it. Diversified. Recurring. Documented. Growing. |
| Beyond the range | About 9x and up | Re-categorized: technology-enabled, platform, or scarce asset. |
How to read it
A horizontal scale of valuation multiples with the typical range shaded. Three markers describe what businesses at the low, middle, and high end look like. A fourth marker beyond the range shows what happens when a business is placed in a better category altogether.
The three P’s
Where this chapter sits
Pull one lever and you improve the outcome. Pull all three and you change it.
Positioning
Which category. Where in the range.
Pre-emption
Find it first. Frame it first.
Process
Competition. Timing. Leverage.
Which category. Where in the range.
More in Positioning
See where your business sits
The Go-To-Market Analysis (GTMA) places your business on these frameworks with your own numbers, before a buyer does.