What is a good EBITDA multiple?

There is no single answer. Multiples vary by sector, size, growth, margin, the share of recurring revenue and customer concentration, and the only evidence for a specific business is what comparable businesses have actually sold for. Treat any quoted range as a starting point and ask what it was drawn from.

Can I use a multiple on revenue instead?

Revenue multiples are used where earnings are not yet meaningful — early-stage or loss-making businesses — and for some software businesses. For a profitable private company EV/EBITDA is the standard, with SDE for smaller owner-managed businesses.

Why does the calculator refuse a negative EBITDA?

A multiple of a negative number has no meaning. A loss-making business is valued on assets, revenue, or a forecast of when it becomes profitable — not on an EBITDA multiple.

Is the implied equity value my offer price?

It is the enterprise value less the net debt you entered. An offer for the shares would also reflect a working-capital target, deferred consideration, an earn-out and the other lines a structure carries. See M&A valuation software for the model that does that.

Free tool

EBITDA Multiple Calculator

The EV/EBITDA multiple is the most quoted number in mid-market M&A and the most misused. This calculator does the arithmetic in both directions — the multiple implied by a price, or the value implied by a multiple — and shows the formula, so the conversation can move on to whether the EBITDA is the right EBITDA and the multiple the right multiple.

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EV / EBITDA

EBITDA

Normalised, last twelve months or last full year — say which when you quote the result.

Enterprise value (or asking price on a debt-free, cash-free basis)

Net debt (optional)

Debt less cash. Leave blank to skip the equity bridge.

Enter EBITDA and an enterprise value to see the result.

The formula

EV/EBITDA = enterprise value ÷ EBITDA. Rearranged, enterprise value = EBITDA × multiple. Because the numerator is enterprise value, an asking price quoted for the shares has to be converted with the enterprise value bridge before a multiple means anything.

A multiple is a shorthand for a price relative to a year of earnings. It carries no information about growth, risk, capital intensity or the quality of the earnings figure — which is exactly why two businesses in the same sector can be worth five times and nine times, and why the useful work starts after the calculator.

Which EBITDA, and which multiple

The EBITDA

Last full financial year, last twelve months, or a forecast — say which; multiples on each are different numbers
Reported, or adjusted for owner costs and one-offs — a multiple on adjusted EBITDA is only as good as the adjustments
For owner-managed businesses, SDE may be the figure the seller is quoting; see EBITDA vs SDE
After a market-rate salary for the owner who is leaving, if the buyer will have to replace them

The multiple

Comparable completed transactions in the same sector and size band are evidence; sector rules of thumb are a starting point
Asking prices on the market are what vendors hope for, not what buyers paid — useful context, never evidence
Smaller businesses trade at lower multiples than larger ones in the same sector; growth, margin, recurring revenue and concentration all move it

Reading an implied multiple

The most useful thing this calculator does is turn an asking price into a multiple you can react to. A memorandum that asks £6m for a business with £750k of adjusted EBITDA is asking eight times; whether that is reasonable depends on what the adjustments were, whether the earnings are recurring, how concentrated the customer base is, and what comparable businesses have actually sold for. The multiple is the question, not the answer.

Inside TrueValue the same arithmetic sits beside the evidence: the valuation engine applies sector multiples adjusted for size, growth, margin and concentration, reads your own comparable-transactions library for the observed multiple, and shows asking-price benchmarks from the marketplace feed as a separate series so the gap between what vendors ask and what the methods support is visible.

Frequently asked questions

What is a good EBITDA multiple?: There is no single answer. Multiples vary by sector, size, growth, margin, the share of recurring revenue and customer concentration, and the only evidence for a specific business is what comparable businesses have actually sold for. Treat any quoted range as a starting point and ask what it was drawn from.
Can I use a multiple on revenue instead?: Revenue multiples are used where earnings are not yet meaningful — early-stage or loss-making businesses — and for some software businesses. For a profitable private company EV/EBITDA is the standard, with SDE for smaller owner-managed businesses.
Why does the calculator refuse a negative EBITDA?: A multiple of a negative number has no meaning. A loss-making business is valued on assets, revenue, or a forecast of when it becomes profitable — not on an EBITDA multiple.
Is the implied equity value my offer price?: It is the enterprise value less the net debt you entered. An offer for the shares would also reflect a working-capital target, deferred consideration, an earn-out and the other lines a structure carries. See M&A valuation software for the model that does that.