Key Insight
Industry multiples are a starting point for negotiation, not a guarantee of value. A business at the high end of its industry multiple range has specific qualities that justify it — and most businesses don't have them.
Common Industry Multiple Ranges (SDE basis)
These are approximate ranges based on transaction data — actual multiples vary based on deal-specific factors:
| Industry | Typical SDE Multiple |
|---|---|
| Software / SaaS | 4-8x (often on ARR or EBITDA) |
| Healthcare services | 4-7x |
| IT managed services | 4-6x |
| Professional services | 3-5x |
| Home services (HVAC, plumbing, electrical) | 3-5x |
| Auto repair / specialty automotive | 2.5-4x |
| Restaurants | 2-4x |
| Retail | 2-3.5x |
| Manufacturing | 3-5x |
| Distribution | 2.5-4x |
What Drives Multiples Within an Industry
Every industry has a wide range — a business at 5x and a business at 2.5x in the same sector are both real. The difference:
Higher multiples: Recurring revenue, low concentration, strong management team, documented processes, consistent growth, transferable goodwill, SBA-fundable financials
Lower multiples: High owner dependency, customer concentration, declining revenue, poor financial documentation, limited transferability, capital-intensive assets requiring near-term replacement
Where to Find Industry Data
- BizBuySell Insight Reports (aggregated transaction data)
- IBBA (International Business Brokers Association) market reports
- Pepperdine Private Capital Markets Report
- Industry-specific associations and trade publications
- Deal experience: your broker or advisor's transaction history in the sector
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