Is a 3x multiple good?
It depends on what it is three times. Three times EBITDA is low for most businesses above €500k of earnings; three times SDE is at the top of the range for a small one.
It depends entirely on what it is three times. Three times SDE is a good outcome for an owner-operated business. Three times EBITDA is low for anything earning above €500,000. Same number, opposite conclusions.
Establish the base before judging the multiple
| If the base is | Then 3× is | Because the normal range is |
|---|---|---|
| SDE (includes your salary) | Strong | 2 – 3.5× |
| EBITDA, under €500k | Reasonable | 2 – 4× |
| EBITDA, €500k – €2M | Below market | 4 – 6× |
| EBITDA, above €2M | Well below market | 5 – 8× |
The first question to ask anyone offering a multiple is which figure they are applying it to, and whether their calculation of that figure matches yours. It usually will not — buyers rebuild the earnings figure from the accounts, and their version is normally lower.
If it is genuinely below market
Three explanations, in order of likelihood. Customer concentration is discounting the whole business. Owner dependence has narrowed the buyer pool to people who want a job. Or the buyer has recalculated your earnings and arrived somewhere you have not seen — in which case ask for their working, because that is a more productive conversation than arguing about the multiple.
SDE vs EBITDA settles the base; EBITDA multiple explained covers what would justify a higher figure.