What is a good EBITDA multiple for a small business?

For SMB service businesses with $1M-$5M in EBITDA, multiples between 4.0x and 7.0x are typical. Industries with high recurring revenue, such as IT managed services and insurance agencies, consistently trade at higher multiples than project-based industries. Anything at or above the sector benchmark for your size band is a strong result.

How do I calculate what my business is worth using EBITDA multiples?

Multiply your adjusted EBITDA by the applicable industry multiple to estimate enterprise value. For example, a plumbing business with $1.5M in adjusted EBITDA and a 5.0x multiple has an estimated enterprise value of $7.5M. Adjusted EBITDA normalizes reported profit for owner compensation, one-time costs, and personal expenses. This is a starting range, not a final price.

Why do EBITDA multiples vary so much within the same industry?

The variation comes from five factors: recurring revenue percentage, owner dependency, customer concentration, growth rate, and business size. Two businesses in the same industry with identical earnings can trade a full turn or more apart based on these alone, because buyers price risk and growth rather than the industry label.

What is the difference between SDE and EBITDA?

SDE includes the owner's total compensation in the earnings figure; EBITDA does not. SDE is used for owner-operated businesses generating under approximately $1M in adjusted earnings, and per IBBA, businesses under $2M in value are quoted on SDE. Larger businesses are quoted on EBITDA, which assumes a market-rate manager replaces the owner. Because SDE is the larger number, SDE multiples look lower than EBITDA multiples for a similar business.

Do interest rates affect EBITDA multiples?

Yes. Lower interest rates reduce the cost of acquisition financing, which improves buyer returns and allows buyers to offer higher multiples, particularly private equity firms using leverage. Higher rates work the other way. Through 2024 and 2025, higher financing costs kept deal volume soft even as multiples for quality businesses held broadly steady.

Why do larger businesses get higher multiples?

Larger businesses carry less risk for buyers. They typically have management teams, diversified revenue, documented processes, and a broader buyer universe. GF Data measures a size premium of 2.8 turns of EBITDA between smaller and larger platforms in its $10M-$500M universe, and Q1 2026 PE-sponsored deals averaged 7.3x. Reaching the next size band lifts the multiple even if nothing else changes.

How accurate are published EBITDA multiple ranges?

Published multiples represent ranges observed in completed transactions, so they are directional guides rather than guarantees. Individual transactions can fall above or below published ranges. Quarterly datasets are also revised and time-sensitive, so always check the reference date and treat figures older than a year as directional.

When is the best time to sell my business?

The best time to sell is when your business is performing well, less dependent on you than it was a year ago, your industry has active buyer demand, and macroeconomic conditions support M&A activity. The controllable variable is preparation: the work that reduces owner dependence and strengthens recurring revenue is the same work that moves a business toward the top of its range.

EBITDA Multiples by Industry 2026: Complete Data Table

EBITDA multiples by industry are the fastest way to sanity-check what a business might sell for, but the industry average is only a starting point. Where a specific business lands inside its range is set by size, recurring revenue, growth, customer concentration, and how dependent the business is on its owner. This guide gives you current US multiples by industry and by deal size, each figure sourced and dated, then shows how to turn a benchmark into a defensible number for your own business.

Key takeaways

EBITDA multiples rise sharply with size. Main Street businesses under $2M in value trade at roughly 2.0x to 3.0x seller's discretionary earnings, while private-equity-sponsored lower-middle-market deals ($10M to $500M) averaged 7.3x adjusted EBITDA in Q1 2026, per GF Data.
The industry average is a midpoint, not a price. Two businesses in the same sector with identical earnings can trade a full turn or more apart, because buyers price risk and growth, not the label of the industry.
Recurring revenue is the biggest upward lever. Businesses with 80%+ recurring revenue command premiums of 1.5x to 2.5x above their industry median; owner-dependent businesses sell at a 1.0x to 2.0x discount.
Small businesses are quoted on SDE, larger ones on EBITDA. Below roughly $2M of value the market uses seller's discretionary earnings; above it, adjusted EBITDA becomes the standard base (IBBA Market Pulse, Q1 2026).
Add-backs and preparation move the number more than the market does. Defensible adjustments to earnings, plus reduced owner dependence and cleaner recurring revenue, carry a business from the bottom of its range to the top.
A multiple is a starting point, not a guarantee. Use it to frame a range, then verify with a proper valuation before anchoring on a price.

Headline benchmarks by deal size

EBITDA multiples in the US move with deal size first and industry second. The clearest way to read the market is the size ladder: the same business earns a higher multiple simply for being larger and less risky to a buyer. The table below summarizes current US benchmarks across the size spectrum.

Business size (enterprise value)	Earnings base	Median multiple	Source
Under $500K	SDE	2.0x SDE	IBBA Market Pulse, Q1 2026
$500K - $1M	SDE	2.8x SDE	IBBA Market Pulse, Q1 2026
$1M - $2M	SDE	3.0x SDE	IBBA Market Pulse, Q1 2026
$2M - $5M	EBITDA	4.0x EBITDA	IBBA Market Pulse, Q1 2026
$5M - $50M	EBITDA	4.5x EBITDA	IBBA Market Pulse, Q1 2026
$10M - $500M (PE-sponsored)	Adjusted EBITDA	7.3x (Q1 2026 avg)	GF Data, Q1 2026 report

US benchmarks, current as of the Q1 2026 reporting cycle. The IBBA and M&A Source Market Pulse Q1 2026 survey ran April 1-16, 2026, covering 300 advisors and 203 closed transactions, and was published June 30, 2026; the GF Data Q1 2026 report was released May 19, 2026. Businesses under roughly $2M are quoted on SDE; larger businesses on EBITDA. The IBBA figures are quarterly medians from an advisor survey and move between quarters, so read them as a level rather than a trend line.

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EBITDA Multiples by Industry: 2026 Data Table

EBITDA multiples for SMB service businesses with enterprise values between $1M and $50M typically run from 3.0x to 12.0x, depending on industry and profile. Two different numbers sit in the table below, and they are not interchangeable.

The EBITDA multiple range and median describe the lower middle market, roughly $1M to $50M of enterprise value. They reflect published US transaction data from GF Data, IBBA Market Pulse and the DealStats Value Index, read against FISART's advisory experience, and they are guide values rather than a promise of outcome.

The median SDE multiple is a published figure from BizBuySell, covering completed Main Street transactions from Q3 2021 through Q2 2026, where the median business sold for about $349,000. Main Street multiples sit well below lower-middle-market multiples for the same trade. That gap is the size premium, not a contradiction: the smaller business is quoted on seller's discretionary earnings, sells to an individual buyer, and carries more owner dependence.

Industry	EBITDA Multiple Range ($1M-$50M EV)	Median EBITDA Multiple	Median SDE Multiple (Main Street)	What Drives the Premium	What Drives the Discount
Plumbing	4.0x - 6.5x	5.0x	2.61x	Service agreements (40%+ recurring), multi-location, licensed workforce	Owner-operated, residential-only, single truck rolls
HVAC	4.5x - 7.5x	5.5x	2.83x	Maintenance contracts (50%+ recurring), commercial mix, geographic density	Seasonal concentration, owner on tools, single brand dependency
Electrical	4.0x - 6.5x	5.0x	2.77x	Commercial/industrial mix, recurring maintenance, multi-branch	Residential-only, permit-dependent, owner as master electrician
Landscaping	3.5x - 6.0x	4.5x	2.49x	Commercial contracts (60%+ recurring), year-round services, irrigation/hardscape mix	Seasonal-only mowing, residential, crew turnover above 50%
Pest Control	5.0x - 8.5x	6.5x	2.46x	Monthly/quarterly service contracts (80%+ recurring), route density, low cancellation	Irregular service calls, owner-run routes, rural territory
Commercial Cleaning	3.0x - 5.5x	4.0x	2.25x	Long-term janitorial contracts, government/institutional clients, trained supervisors	High labor turnover, single large client, owner manages all crews
IT Managed Services	5.0x - 10.0x	7.0x	3.22x	Monthly recurring revenue (85%+), low churn (<5%), cybersecurity offering, sticky tech stack	Break-fix revenue, owner as primary engineer, single vertical
Home Healthcare	5.0x - 9.0x	7.0x	3.00x	Medicare/Medicaid certification, skilled nursing mix, multi-state licensing, low readmission rates	Non-medical only, single referral source, high aide turnover
Dental Practices	5.0x - 8.0x	6.0x	2.75x	Multi-provider, DSO-ready infrastructure, specialist services, patient base 2,000+	Solo practitioner, owner provides 80%+ of production, aging patient base
Veterinary Clinics	6.0x - 10.0x	7.5x	Not reported	Multi-doctor, emergency/specialty services, corporate-ready ops, growing patient count	Solo vet, owner-dependent, rural location, declining caseload
Accounting Firms	4.0x - 7.0x	5.0x	2.27x	Advisory/consulting revenue (30%+), client retention 95%+, staff CPAs, diversified base	Tax-season-only revenue, owner manages all clients, aging client base
Insurance Agencies	7.0x - 12.0x	8.5x	2.87x	Renewal commissions (85%+ retention), diversified book, commercial lines, agency management system	Personal lines only, single carrier, owner holds all relationships
Staffing Agencies	3.5x - 7.0x	5.0x	2.66x	Contract staffing (recurring), multi-vertical, high gross margins (30%+), diversified client base	Temp-only, single client >25% of revenue, low margins (<20%)

EBITDA ranges and medians: lower middle market ($1M-$50M enterprise value), FISART advisory experience read against GF Data, IBBA Market Pulse and the DealStats Value Index. Median SDE multiples: BizBuySell, completed Main Street transactions from Q3 2021 through Q2 2026 for businesses valued between $100K and $5M, updated biannually. Veterinary clinics are not broken out in the BizBuySell data. The two columns describe different market segments and are not directly comparable.

A note on these ranges: The low end represents a business that a buyer perceives as risky or dependent on the current owner. The high end represents a business that generates predictable cash flow with management in place. Most businesses fall somewhere in the middle. Sector dispersion is wide across the wider market too: in the DealStats Value Index, the information sector carries the highest all-time median EBITDA multiple and accommodation and food services the lowest, at 2.5x.

See the full business valuation multiples picture across metrics

What Drives EBITDA Multiple Differences

Five factors explain most of the variation in EBITDA multiples within any given industry: recurring revenue, owner dependency, customer concentration, growth, and size. Two businesses with the same EBITDA in the same sector routinely trade a full turn apart, and the difference is almost always one of these five.

Recurring Revenue Premium

Businesses with predictable, contracted recurring revenue trade at higher multiples. This is the single largest driver of valuation differences within an industry.

The pattern is consistent. Service businesses with less than 30% recurring revenue typically trade at the low end of their industry range. Businesses with 50-70% recurring revenue trade at or above the median. Businesses with 80%+ recurring revenue command premiums of 1.5x-2.5x above the industry median.

Recurring revenue reduces risk for the buyer. A pest control company with 3,000 monthly service agreements has a fundamentally different risk profile than one relying on seasonal call volume.

Owner Dependency Discount

Owner dependency is the most common reason a business sells below its industry median. If the owner is the primary technician, the primary salesperson, or the primary client relationship holder, a buyer faces transition risk.

In FISART's advisory experience, businesses where the owner works 50+ hours per week and holds the primary client relationships sell at a 1.0x-2.0x discount. Businesses with a general manager, department leads, and documented processes sell at or above the median.

The question a buyer asks is: "What happens to revenue if the owner leaves in 12 months?" If the answer is "revenue drops 30%+," the multiple drops accordingly. FISART quantifies owner dependency as part of every valuation engagement, so sellers know exactly where they fall on this spectrum before a single buyer asks the question.

Customer Concentration Risk

A business where one client represents more than 20% of revenue carries concentration risk. If that client represents more than 40% of revenue, many buyers will either discount the multiple by 1.0x-1.5x or structure the deal with an earn-out tied to retention.

The ideal profile is no single client above 10% of revenue, with the top 10 clients representing less than 40% of total revenue. Commercial cleaning and staffing agencies are the industries most frequently affected by concentration risk.

Growth Trajectory

Buyers pay more for businesses growing revenue and EBITDA year-over-year. A business growing at 15%+ annually will receive offers 0.5x-1.5x above a flat or declining peer.

The growth must be organic and sustainable. Revenue growth driven entirely by one large contract win or a one-time project does not command the same premium. Buyers discount growth that depends on factors the current owner controls but the next owner may not replicate.

Size Premium

Larger businesses within the same industry trade at higher EBITDA multiples. This is called the "size premium" and it is well documented in US M&A data. GF Data, which tracks private-equity-sponsored deals from $10M to $500M in enterprise value, measured the premium at 2.8 turns of EBITDA through the first nine months of 2025: smaller platforms averaged 7.0x adjusted EBITDA against 9.8x for larger ones. At the tier level, the $10M-$25M band sat near 5.9x and $100M-$250M deals near 10.0x.

EBITDA Level	Typical Multiple Range	Why
$500K - $1M	3.0x - 4.5x	Higher risk, owner-dependent, limited buyer pool
$1M - $2M	4.0x - 5.5x	More buyer interest, some management in place
$2M - $5M	5.0x - 7.0x	Private equity eligible, management team exists
$5M+	6.0x - 9.0x+	Institutional buyer pool, scalable platform

A plumbing company generating $5M in EBITDA will typically trade at a higher multiple than a plumbing company generating $1M in EBITDA, even if both have similar growth rates. The larger business has more infrastructure, a broader buyer universe, and lower per-unit acquisition cost for the buyer.

GF Data's reporting confirms this pattern across all industries. Purchase-price multiples averaged 7.3x trailing-twelve-month adjusted EBITDA in Q1 2026 across 80 completed private-equity-sponsored deals from $10M to $500M in enterprise value, holding above the full-year 2025 average of 7.2x. Within that universe the $10M-$25M tier sat near 5.9x and $100M-$250M deals near 10.0x.

See where your business sits in its range with a data-backed estimate from the FISART valuation calculator, then pressure-test it against these benchmarks.

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Worked Example: From Adjusted EBITDA to Enterprise Value

The clearest way to see how a multiple works is to run one business through the math. Consider a home-services business with $1.6M of reported EBITDA, preparing for a sale in the $5M-$50M band. The first step is to normalize earnings with defensible add-backs, then apply the industry multiple.

Step	Item	Amount
Reported EBITDA	Earnings before interest, taxes, depreciation, amortization	$1,600,000
Add-back	Above-market owner compensation	+$250,000
Add-back	One-time legal and consulting costs	+$80,000
Add-back	Personal expenses run through the business	+$70,000
Adjusted EBITDA	Normalized earnings base	$2,000,000
Multiple	Industry benchmark for the size band	6.0x
Enterprise value	Adjusted EBITDA x multiple	$12,000,000

Illustrative example. Actual add-backs and multiples vary by business, sector, and market conditions.

The add-backs alone moved the earnings base from $1.6M to $2.0M, which at a 6.0x multiple is a $2.4M swing in enterprise value. Now hold earnings constant and change only the multiple: the same business positioned as small and owner-dependent at 4.5x clears $9.0M; prepared and positioned at 6.0x, it clears $12.0M. That $3.0M gap is decided by preparation and positioning, not by the market.

Enterprise value is not the cash a seller keeps. The actual proceeds depend on deal structure, including any earn-out or seller note, the working-capital adjustment, debt, and taxes.

How a full business valuation works, end to end

How to Read These Numbers

An EBITDA multiple is one input in a valuation, not the final price. This section is for business owners encountering these numbers for the first time.

EBITDA Multiples Are a Starting Point

The final sale price depends on many additional factors: deal structure, buyer type, competitive dynamics, and negotiation. The multiples in this article reflect what buyers have actually paid in recent US transactions. They are backward-looking, and future transactions may differ based on market conditions, interest rates, and buyer demand.

SDE vs. EBITDA: Which Applies to Your Business

Two metrics are used to value SMB service businesses: Seller's Discretionary Earnings (SDE) and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

SDE adds back the owner's total compensation to net income, along with interest, taxes, depreciation, and amortization. SDE is the standard metric for owner-operated businesses generating less than approximately $1M in adjusted earnings. SDE multiples for SMB service businesses typically range from 2.0x to 4.0x.

EBITDA does not add back owner compensation. It assumes the business pays a market-rate manager to replace the owner. EBITDA is the standard metric for businesses generating approximately $1M or more in adjusted earnings, or for businesses already run by a management team.

A general guideline: if you are the primary operator and your business generates less than $1M in adjusted earnings, start with SDE. If you have a management team in place or generate $1M+ in adjusted earnings, use EBITDA.

What "Enterprise Value" Means

The EBITDA multiples in this article produce an enterprise value, which is the total value of the business before adjusting for cash, debt, and working capital. The actual cash a seller receives at closing depends on the deal structure, including the balance-sheet adjustment, any earn-out or seller note, and tax treatment.

How small businesses are valued with SDE

Year-Over-Year Trends: 2024, 2025, and 2026

Through 2024 and 2025, EBITDA multiples held broadly steady for quality businesses while deal volume stayed soft and buyers grew more selective.

2024: Recovery and Recalibration

The Federal Reserve held the federal funds rate at 5.25%-5.50% through mid-2024 before beginning rate cuts in September 2024. High borrowing costs suppressed deal volume throughout the first half of the year.

EBITDA multiples remained stable for high-quality businesses during this period. Premium businesses with recurring revenue and management teams still received competitive offers, while weaker profiles saw fewer offers and longer time-to-close.

2025: Steady Multiples, Selective Buyers

Multiples held roughly flat while volume stayed constrained. GF Data reported full-year 2025 purchase-price multiples steady at 7.2x adjusted EBITDA for private-equity-sponsored deals from $10M to $500M, even as its tracked deal count fell 23% from 2024. The DealStats Value Index eased from 3.7x in Q3 2025 to 3.5x in Q4 2025 across all industries.

On Main Street, BizBuySell put the median sale price at about $350,000, with the average cash-flow (SDE) multiple at 2.7x. Buyers paid premiums for quality rather than lifting the whole market, and the gap between prepared and unprepared businesses widened.

2026: Firm at the Top, Thinner Below

The first half of 2026 sharpened the same split rather than reversing it. GF Data put Q1 2026 purchase-price multiples at 7.3x adjusted EBITDA across 80 completed deals, above the full-year 2025 average. On Main Street, BizBuySell recorded 2,117 closed transactions in Q2 2026, down 10% year over year, while the average cash-flow multiple edged up 2% to 2.7x and the median sale price held at $349,250. Fewer businesses sold, and the ones that did were the better-prepared ones.

The IBBA Market Pulse survey for Q1 2026, covering 203 closed transactions reported by 300 advisors, shows the same selectivity in the reported medians: 2.0x SDE below $500K, 3.0x SDE in the $1M-$2M band, and 4.5x EBITDA in the $5M-$50M band. These are quarterly medians from a survey rather than a full transaction census, so single-quarter moves should not be read as a trend.

The pattern favors well-prepared businesses over the broad market. Multiples for businesses with recurring revenue, management in place, and $2M+ of EBITDA remain firm, while owner-dependent or single-client businesses face longer processes and more scrutiny.

The main risk is macroeconomic: a shift in rate policy or a demand slowdown would pull volume and buyer confidence down. The controllable variable is preparation, which is what moves a business within its range regardless of where the market sits.

A worked HVAC valuation, from multiple to offer

What These EBITDA Multiples by Industry Mean for Your Business

The data above provides context, but every business is unique. Your specific multiple depends on the five factors outlined above: recurring revenue, owner dependency, customer concentration, growth trajectory, and size.

Three steps move you from these reference numbers to an actual estimate:

Identify your industry range from the table above
Assess where you fall on the five value drivers
Get a data-driven valuation that accounts for your specific financial profile, market position, and buyer demand in your geography

A business in the upper quartile on most value drivers will typically receive offers in the top third of the range. A business in the lower quartile will receive offers in the bottom third or below the range. A structured, competitive sale process also lifts the realized multiple, because bidding buyers price against each other rather than anchoring low.

How a competitive sale process lifts your multiple

Why customer concentration discounts your multiple

This article is for general information and does not replace individual advice from a qualified M&A advisor, valuation professional, or tax advisor. Industry multiples are guide values from market data, not a promise of a specific sale price.

About the author: Philipp Massmann guides owners of mid-market companies through the sale process at FISART, from valuation to competitive bidding.