Tag
Multiples
32 pages across every collection.
Article··2 min
How profitability affects valuation
Margin does not just raise the earnings the multiple is applied to — it raises the multiple itself. Why the effect compounds, and what a five-point improvement is actually worth.
Article··2 min
How recurring revenue affects valuation
Why contracted revenue is worth two to three times what project revenue is worth, the four tiers buyers actually distinguish, and how to move revenue up a tier before you sell.
Article··2 min
SDE vs EBITDA
Which earnings figure applies to your business, why the multiples attached to them are not interchangeable, and the €400,000 mistake owners make when they mix the two.
Article··2 min
DCF valuation explained
Discounted cash flow without the spreadsheet mysticism — what the discount rate actually represents, why terminal value is usually most of the answer, and when a DCF is worth building.
Article··5 min
Customer concentration: what the evidence actually says
One big customer is supposed to cost you a full turn on your multiple. That figure has no source. What the research does show is different, more specific and more useful.
Article··2 min
Revenue multiple explained
When turnover is a defensible basis for value, what the ranges actually are by business model, and the two situations where using one costs you money.
Article··6 min
The private company discount, and the case against it
Being unlisted is supposed to cost you 20 to 30 percent of your value. The published estimates run from zero to fifty, and the best-identified ones cluster far below what practitioners apply.
Article··6 min
Size moves your multiple more than anything you control
The best-supported finding in SME valuation is also the least useful advice: bigger businesses sell for more. Here is the evidence, and why the causal version of it is probably wrong.
Article··6 min
Where SME multiples actually come from
Every multiple you have read was published by someone selling something. Here is who collects the data, how, and why two datasets covering the same businesses disagree by a factor of two.
Article··3 min
EBITDA multiple explained
What actually sets your multiple — size, growth, concentration and owner dependence — and why the sector average you found online is the least useful number in the calculation.
Article··3 min
How to value a business
The whole process in seven steps — from the earnings figure you start with to the range you end up defending. Written for owners doing this for the first time.
Article··2 min
Revenue multiple or EBITDA multiple?
One of these two methods will flatter your business and the other will not. Which one applies depends on facts about your company, not on which number you prefer.
Answer··1 min
Can I value a business with one year of accounts?
Yes, but the range widens substantially and the multiple drops. Buyers price uncertainty, and a single year gives them no trend to price against.
Answer··1 min
Does my industry affect my multiple?
Less than owners expect. Sector sets a rough band; size, concentration, revenue quality and owner dependence decide where inside it you land — and that spread is wider than the gap between sectors.
Answer··2 min
Does my business being dependent on me lower the price?
No published study puts a number on it. What is measured is that CEOs move operating performance, and that dependence narrows the buyer pool, which is the more concrete cost.
Answer··2 min
Does customer concentration lower my valuation?
The direction is well evidenced and the size of the effect is not. Concentration raises a buyer's cost of capital and reduces the number of bidders, which is where the money goes.
Answer··2 min
How does growth affect valuation?
Growth raises the earnings a multiple is applied to, which is certain. Whether it raises the multiple itself is far less well evidenced than the figures in circulation suggest.
Answer··2 min
How does recurring revenue affect valuation?
Predictable earnings are worth more, and the finance research supports that. No published study measures how much recurring revenue adds to a small business multiple.
Answer··1 min
Which valuation method is most accurate?
None of them. Accuracy is the wrong frame — the useful method is the one your buyer will use, and for most SME transactions that is an earnings multiple.
Answer··1 min
Why do valuation methods give different answers?
Because each encodes different assumptions about the future. The gap is not an error to average away — it is the most useful output of the whole exercise.
Answer··1 min
Should I use SDE or EBITDA?
SDE if one owner works full time in the business and the buyer will replace them personally. EBITDA once a management layer exists. The multiples are not interchangeable.
Answer··2 min
Does company size affect the multiple?
More than any other single factor, and it is the one claim in this field that replicates across four independent datasets on three continents. The reason is the buyer pool.
Answer··1 min
What is an ARR multiple?
Annual recurring revenue times a figure between 3 and 8, used for subscription software. Churn and net revenue retention decide where inside that range you land.
Answer··1 min
How do I find the multiple for my industry?
Published sector averages are drawn from transactions far larger than most SMEs. Confirm the size band before using any comparable — and if you cannot find it, do not use the figure.
Answer··1 min
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.
Answer··1 min
What is a revenue multiple?
A shortcut that prices a business at a number of times turnover, assuming margin is predictable within a business model. Divide it by your margin to see what it really implies.
Answer··1 min
What is a good EBITDA multiple?
Four to six times for an SME under €2M of EBITDA, two to four below €500k. Where you sit inside the band matters more than the band itself.
Answer··1 min
What multiple do small businesses sell for?
Most businesses under €1M of turnover sell for 2 to 3.5 times SDE. The figure that trips owners up is which earnings number that multiple applies to.
Answer··1 min
Why do some companies sell for higher multiples?
Four reasons account for nearly all of it: size, growth, revenue quality and independence from the owner. Only the first has published numbers behind it.
Answer··1 min
How many times profit is a business worth?
Two to six times normalised earnings for most owner-managed businesses — but 'profit' has to mean the right thing, and reported net profit almost never does.
Answer··1 min
What is my company worth based on revenue?
Revenue multiples run from 0.3× to 8× depending on business model — but any revenue multiple is an earnings multiple in disguise, and dividing by your margin reveals which.
Answer··1 min
How much is my business worth?
Most owner-managed businesses sell for two to six times normalised annual earnings. Where you land inside that range depends on four things you can check today.