Key Takeaway:
An EBITDA multiple helps estimate enterprise value, but the number can vary significantly by industry, company size, growth, and risk. In the 2026 Pepperdine Private Capital Markets Report, median deal multiples for companies with $1 million to $4.99 million in EBITDA ranged from 4.5x for consumer goods to 7.0x for information technology, with manufacturing at 5.2x, construction at 5.0x, business services at 6.2x, and health care at 6.0x.
An EBITDA multiple is one of the most common ways buyers estimate enterprise value. If a company generates $2 million in normalized EBITDA and is valued at a 6x multiple, the indicated enterprise value is approximately $12 million.
That does not necessarily mean the seller receives $12 million. Debt, cash, working capital adjustments, transaction expenses, and other deal terms can affect the final business sale price and seller proceeds.
EBITDA multiples by industry also differ because buyers evaluate recurring revenue, growth, capital requirements, customer concentration, competitive risk, and the predictability of future earnings. Company size matters too, with deal multiples generally increasing as businesses become larger and less risky.
What Determines an EBITDA Multiple?
Buyers generally pay higher EBITDA multiples for companies with dependable earnings, strong growth, recurring revenue, diversified customers, and management teams that can operate without the owner. Volatile margins, heavy capital needs, customer concentration, or significant owner dependence can push the multiple lower.
Industry and size can both make a meaningful difference. For companies with $1 million to $4.99 million in EBITDA, 2026 median deal multiples included 5.0x for construction, 5.2x for manufacturing, 6.0x for health care, 6.2x for business services, and 7.0x for information technology.
Those figures are benchmarks, not automatic valuations. A company with $2 million in normalized EBITDA would have an indicated enterprise value of $10 million at 5x and $14 million at 7x. That $4 million difference shows how growth, earnings quality, risk, and buyer demand can affect valuation.
Owners preparing for a sale can also focus on the factors that can strengthen business value before going to market.
EBITDA Multiples in Manufacturing
Manufacturing EBITDA multiples reflect both earnings potential and the capital required to produce those earnings. Equipment, inventory, labor, maintenance, and supply-chain exposure can reduce value, while specialized products, long-term customers, strong margins, and efficient operations can support a higher multiple.
The 2026 private-market data show how company size can affect manufacturing valuations. Median manufacturing deal multiples were 5.0x below $1 million in EBITDA, 5.2x from $1 million to $4.99 million, 6.5x from $5 million to $9.99 million, and 7.0x for businesses with $10 million or more in EBITDA.
At the 5.2x median, a manufacturer producing $2 million in normalized EBITDA would have an indicated enterprise value of approximately $10.4 million. A larger manufacturer producing $6 million in EBITDA at the 6.5x median would have an indicated enterprise value of about $39 million.
Buyers will still examine what sits behind the EBITDA. Equipment condition, capital expenditure requirements, customer concentration, supplier dependence, backlog, margins, safety records, and the ability to pass higher input costs on to customers can all affect the final multiple.
A manufacturer with modern equipment, diversified customers, reliable margins, and documented processes may justify a stronger valuation than another company with the same EBITDA but greater capital needs or customer risk.
Important Facts About EBITDA Multiples by Industry
- For companies with $1 million to $4.99 million in EBITDA, 2026 median deal multiples ranged from 4.5x for consumer goods to 7.0x for information technology.
- Manufacturing businesses in that EBITDA range had a median multiple of 5.2x, while business services reached 6.2x.
- Company size can materially affect valuation. Manufacturing multiples increased from 5.0x below $1 million in EBITDA to 7.0x for businesses above $10 million.
- Recurring revenue, strong margins, diversified customers, and lower owner dependence can support a higher EBITDA multiple.
- EBITDA multiples estimate enterprise value, while debt, cash, working capital, and deal structure can affect the final business sale price and seller proceeds.
EBITDA Multiples in Technology
Technology companies can support stronger EBITDA multiples when buyers see scalable growth, recurring revenue, and limited capital requirements. In the 2026 data, information technology companies generating $1 million to $4.99 million in EBITDA had a median deal multiple of 7.0x.
At that benchmark, a technology company producing $2 million in normalized EBITDA would have an indicated enterprise value of about $14 million. The actual multiple may move higher or lower based on recurring revenue, growth, gross margins, customer retention, intellectual property, and dependence on founders or key employees.
Buyers may also examine churn, net revenue retention, cybersecurity, product concentration, and the strength of the development and sales teams. A technology company with predictable subscription revenue can present a very different risk profile from a project-based business with the same EBITDA.
EBITDA Multiples in Trade Services
Trade services such as HVAC, plumbing, electrical, and roofing are often valued on the stability and repeatability of their earnings. Recurring maintenance agreements, diversified customers, technician depth, and a strong local market position can support a higher EBITDA multiple.
The Pepperdine data do not provide a separate benchmark for individual trades. Construction offers a broader point of reference, with median multiples of 3.5x below $1 million in EBITDA, 5.0x from $1 million to $4.99 million, and 6.5x from $5 million to $9.99 million. Those figures should not be treated as direct HVAC, plumbing, electrical, or roofing benchmarks.
For an individual trade-services company, buyers may look closely at residential versus commercial revenue, service agreements, customer concentration, licensing, safety records, fleet condition, technician retention, dispatch efficiency, and owner dependence.
A business with recurring service revenue, strong technician retention, diversified customers, and systems that operate without the owner may command a stronger multiple than another company with similar EBITDA but greater operational risk.
EBITDA Multiples in Other Middle-Market Industries
EBITDA multiples by industry can vary significantly even among companies of similar size. For businesses with $1 million to $4.99 million in EBITDA, 2026 median deal multiples were 4.5x for consumer goods, 5.5x for wholesale, 6.0x for health care, 6.2x for business services, and 7.0x for information technology.
For a company producing $2 million in normalized EBITDA, those benchmarks would imply enterprise values ranging from about $9 million at 4.5x to $14 million at 7.0x. That $5 million difference illustrates why industry characteristics can materially influence valuation.
Health care buyers may focus on reimbursement, regulation, provider concentration, and recurring demand. Business-services buyers often look at contract quality, customer retention, margins, and key-person risk. Consumer businesses may be judged on brand strength, inventory, margins, customer loyalty, and sales-channel diversification.
Industry benchmarks are useful starting points, but they do not determine the final EBITDA multiple. Two businesses in the same sector can receive very different offers when one has stronger growth, cleaner financials, lower customer concentration, and less owner dependence.
EBITDA Multiples FAQs
How is an EBITDA multiple calculated?
What are typical EBITDA multiples by industry?
Why do some businesses receive higher EBITDA multiples than others?
Does company size affect the EBITDA multiple?
How does an EBITDA multiple affect business sale price?
Use EBITDA Multiples as a Starting Point
EBITDA multiples by industry can help owners set realistic expectations, but they are only a starting point. Company size, growth, recurring revenue, customer concentration, capital needs, and management depth can all push the final EBITDA multiple above or below an industry benchmark.
The goal is to understand what buyers are likely to value and where the business may still have room to improve. Strengthening those areas before going to market can support a stronger business sale price and reduce surprises during negotiations.
If you are considering a sale, IAG can help you evaluate your business, understand the factors that may influence your EBITDA multiple, and prepare for buyer scrutiny. Contact our team to discuss your goals and next steps.
