EBITDA & SDE Multiples Method
Market-based valuation using earnings multiples. EBITDA multiples for larger businesses, SDE multiples for smaller owner-operated companies.
When to Use Each Multiple
EBITDA Multiples
Best for larger businesses with professional management and minimal owner involvement.
Revenue typically $5M+
Professional management in place
Minimal owner compensation adjustments
SDE Multiples
Best for smaller, owner-operated businesses where owner compensation needs adjustment.
Revenue typically under $5M
Significant owner involvement
Owner compensation normalization needed
Typical Multiple Ranges
Small Businesses
Under $1M Revenue
1.5-3.0x
SDE Multiple Range
Mid-Market
$1M-$10M Revenue
2.0-5.0x
EBITDA Multiple Range
Larger Companies
$10M+ Revenue
4.0-8.0x
EBITDA Multiple Range
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