Last updated: June 2026
Key takeaways
- Mid-market companies are valued on a multiple of adjusted EBITDA, not reported EBITDA.
- The multiple is set by recurring revenue, customer concentration, owner dependence, growth, and margins.
- The only number that matters is what a real buyer pays in a competitive process, not a figure chosen to win your signature.
- You can lift the multiple before you sell by raising recurring revenue and reducing concentration and owner dependence.
The short answer
Most mid-market companies are valued on a multiple of EBITDA, the company's earnings before interest, tax, depreciation, and amortisation. A company with $5m of EBITDA valued at a 6x multiple is worth roughly $30m in enterprise value. The real questions are what your true EBITDA is, and what multiple a buyer will pay for it.
EBITDA, and adjusted EBITDA
Reported EBITDA is rarely the number a deal is done on. Buyers work from adjusted EBITDA, which strips out one-off costs and owner-specific expenses to show the underlying, transferable earnings. Done honestly, adjustments lift the number a buyer will pay. Done aggressively, they collapse in diligence and take the deal with them.
What drives the multiple
Two companies with identical EBITDA can be worth very different amounts. The multiple reflects how certain, transferable, and scalable the earnings are:
- Recurring revenue. Contracted, repeat income is worth more than one-off sales, because the buyer is paying for certainty.
- Customer concentration. If one or two clients are most of the revenue, buyers discount for the risk.
- Owner dependence. A business that runs without the founder in every decision sells for a premium.
- Growth. A clear, evidenced path to growth is worth real multiple points.
- Margins and cash conversion. Durable margins and clean cash flow raise confidence and the price.
Why multiples vary by sector
Multiples differ by sector because the underlying economics differ. Business services and healthcare roll-ups with recurring revenue and active acquirers tend to command higher multiples than project-based or cyclical businesses. Rather than quote a fake number, the useful question is which drivers your sector's buyers reward most, and whether your company has them. Our sector pages answer that for each of our four industries.
The only number that matters
A valuation is not the figure on a spreadsheet. It is the price a real buyer will pay, in cash and terms, in a competitive process. Two things follow. First, beware any adviser who wins your mandate with a flattering number; it will not survive diligence. Second, the way to discover the real number is to run a process, which is what sell-side advisory does.
How to increase your valuation before selling
Often the most valuable move is to wait and build. Lifting recurring revenue, reducing concentration, removing owner dependence, and cleaning up the financials can change the multiple, not just the earnings, and on a multiple the effect compounds. That is the work of exit readiness and value creation: closing the gap between today's price and the right one.