EBITDA & SDE multiples by industry
What do businesses in your sector actually sell for? Here are the typical earnings multiples buyers pay across the lower middle market, what pushes a company to the top of its range, and how to turn that into a rough number for your own business.
What a multiple is
Most small and lower-middle-market businesses are priced the same way. You take a measure of profit and multiply it by a number. That number is the multiple, and it captures how much a buyer will pay for each dollar of your earnings.
So a business earning $1M a year, in a sector that trades around 5x, is worth roughly $5M before any adjustments. The multiple is shorthand for everything buyers care about: how risky the cash flow is, how fast it's growing, and how many buyers are competing for businesses like yours. A sector with predictable revenue and lots of active acquirers carries a higher multiple than one built on one-off projects.
SDE vs EBITDA: when each one applies
The two common profit measures are SDE and EBITDA, and which one you use depends mostly on the size of your business.
SDE (Seller's Discretionary Earnings) is net profit with the owner's salary and personal or one-time expenses added back. It answers a simple question: how much money does this business put in one owner-operator's pocket? It's the right measure for smaller, hands-on businesses, usually under about $1M in earnings.
EBITDA is earnings before interest, taxes, depreciation, and amortization. It does not add the owner's pay back in, because it assumes the business runs on a paid management team. It's used for larger companies, generally above $1M to $2M in earnings.
Here's the part that trips people up: SDE multiples are lower than EBITDA multiples for the same business. That's not a contradiction. SDE is a bigger profit number because it includes owner pay, so it gets multiplied by a smaller figure. The two methods tend to land in a similar place. If your earnings sit near the boundary, it's worth running both.
Typical earnings multiples by industry
The table below shows indicative lower-middle-market ranges by industry. Recurring-revenue and roll-up-favored sectors sit at the top. Thin-margin, project-based, or owner-dependent sectors sit at the bottom. Read the basis column carefully, since some sectors price on SDE, some on EBITDA, and some on either depending on size.
| Industry | Typical multiple | Basis |
|---|---|---|
| HVAC & Home Services | 4.0–7.0x | EBITDA |
| SaaS & Software | 4.0–9.0x | EBITDA |
| MSP & IT Services | 5.0–9.0x | EBITDA |
| Insurance Agency | 5.0–9.0x | EBITDA |
| Pest Control | 6.0–11.0x | EBITDA |
| Healthcare & Medical Practices | 4.0–7.0x | EBITDA |
| Accounting & CPA Firms | 3.0–6.0x | SDE/EBITDA |
| Manufacturing | 4.0–6.0x | EBITDA |
| Logistics & Distribution | 4.0–6.0x | EBITDA |
| Professional Services | 3.0–5.0x | SDE/EBITDA |
| Marketing & Creative Agencies | 3.0–6.0x | EBITDA |
| Construction & Trades | 3.0–5.0x | EBITDA |
| E-commerce & Retail | 3.0–5.0x | SDE |
| Restaurants & Food Service | 2.0–4.0x | SDE |
| Other / General | 3.0–5.0x | SDE/EBITDA |
These match the ranges used in the ProCloser business valuation calculator. They are indicative, not a quote.
What moves a business within its range
Two businesses in the same industry, with the same earnings, can sell for very different prices. The industry sets the range. These factors decide where you land inside it.
- Growth. Steady year-over-year revenue growth is the strongest pull toward the top of the range. Flat or declining revenue pulls the other way.
- Recurring revenue. Contracts, subscriptions, and service agreements make cash flow predictable, and buyers pay up for predictability. This is the main reason pest control and SaaS sit so high.
- Margins. If your margins beat your peers and hold steady, buyers see a healthier, better-run business and price it accordingly.
- Customer concentration. When one client is more than roughly 15–20% of revenue, buyers worry about what happens if that client leaves, and they discount for it.
- Owner dependence. A business that keeps running when the owner steps back is worth more than one that depends on the owner for sales, relationships, or daily decisions.
- Clean books. Reviewed or audited financials and well-documented add-backs survive due diligence. Messy books invite price cuts late in the process.
Why ranges, not single numbers
You'll notice every entry above is a range, not a point. That's deliberate. A single number would be false precision. The spread between the low and high end is where all the factors above play out. A pest control company growing 20% a year with recurring contracts and a real management team earns the top of its range. A flat one that leans on the owner earns the bottom.
The range tells you the realistic floor and ceiling for your sector. Narrowing it to one defensible number takes your actual financials and the comparables buyers are paying right now, which is what an advisor does.
How to estimate your own value
You can get a quick estimate in a couple of minutes. Take your annual earnings, decide whether you're using SDE or EBITDA, find your industry's range above, and multiply. Earnings near the boundary? Run both and look at the overlap.
The ProCloser business valuation calculator does this for you and returns a range with a midpoint. Once you have a value estimate, use our M&A advisory fee calculator to model what an advisor will cost at that deal size. When you're ready for a number you can take to a buyer, read our guide to selling your business or get matched with a vetted M&A advisor who'll review your financials against live comparables for free.
Methodology
The ranges in this report are aggregated, indicative figures drawn from typical lower-middle-market transaction patterns. They are meant for orientation and sanity-checking, not as a valuation, appraisal, or guarantee of price. Real multiples vary deal by deal based on financial quality, growth, recurring revenue, customer mix, owner dependence, current buyer demand, and how the transaction is structured. We have not published precise statistics, sample sizes, or study results here on purpose, because a single business can sit well outside its sector's typical band. Treat these as a starting frame and confirm with a qualified advisor before making any decision.
ProCloser.ai. "EBITDA & SDE Multiples by Industry (2026 Report)."
https://procloser.ai/blog/ebitda-multiples-by-industry/
Common questions about earnings multiples
What is a good EBITDA multiple?
There's no single good number. It depends on your industry and how you compare to peers. For most lower-middle-market companies, EBITDA multiples land between 3x and 9x, with recurring-revenue sectors like pest control, MSP/IT, and insurance reaching into double digits. A good multiple is one near the top of your industry's range, and you get there with consistent growth, strong margins, recurring revenue, and low owner dependence.
What's the difference between SDE and EBITDA multiples?
SDE adds the owner's salary and personal add-backs back into profit, so it suits owner-operated businesses under about $1M in earnings. EBITDA doesn't add owner pay back and is used for larger businesses with a management team. Because SDE includes the owner's compensation, SDE multiples are lower than EBITDA multiples for the same business.
Why do SaaS and pest control sell for higher multiples?
Both run on recurring revenue. SaaS earns subscriptions, pest control earns repeat service contracts. Buyers pay more for cash flow they can count on, and both sectors attract well-funded buyers building roll-ups, which adds competition. Predictable revenue plus active acquirers is what lifts their multiples above project-based sectors.
How do I find my business's multiple?
Start with your industry's range above, then judge where you sit based on growth, recurring revenue, margins, customer concentration, and owner dependence. The valuation calculator gives you an indicative range, and a specialized advisor can confirm it against live comparables for free.
Are these multiples a valuation of my business?
No. They're aggregated, indicative ranges based on typical lower-middle-market transactions, useful for orientation and sanity checks but not a valuation, appraisal, or guarantee. Real multiples vary by deal based on financial quality, market timing, and structure.
Get a free, advisor-reviewed valuation.
The table gives you a range. A vetted M&A advisor in your industry gives you a number you can take to the table, and tells you honestly what it would take to reach the top of your range. Free to sellers. No retainer to find out.
Tania leads ProCloser's network of vetted M&A advisory firms and works with business owners every week on valuation, fit, and getting matched to the right advisor to sell. Get matched free.