Looking to sell or buy a business? You’ll likely need to know the industry’s EBITDA, multiples, and sales price.
We scoured the internet to bring you this comprehensive list of common industry multiples and sale prices in 2024.
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What is EBITDA?
EBITDA, short for earnings before interest, taxes, depreciation, and amortization, is a way for businesses to measure a business’s profitability by excluding non-operational expenses like interest, taxes, and depreciation. It’s often used in business valuation when a company is trying to sell or buy a business.
To calculate the business in question’s EBITDA, follow this formula:
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization.
The exclusion of non-operational expenses makes it easier to compare performance across different companies, but it’s important to remember it doesn’t account for capital expenditures or actual cash flow.
EBITDA Multiples by Industry
Here are common EBITDA multiples across different industries, according to Equidam.
Industry | EBITDA Multiple |
---|---|
Advanced Medical Equipment & Technology | |
Advertising & Marketing | |
Aerospace & Defense | |
Agricultural Chemicals | |
Airlines | |
Airport Operators & Services | |
Aluminum | |
Apparel & Accessories | |
Apparel & Accessories Retailers | |
Appliances, Tools & Housewares | |
Auto & Truck Manufacturers | |
Auto Vehicles, Parts & Service Retailers | |
Auto, Truck & Motorcycle Parts | |
Banks* | |
Biotechnology & Medical Research | |
Brewers | |
Broadcasting** | |
Business Support Services** | |
Call Center Services | |
Cleaning Services | |
Commercial Educational Services | |
Corporate Accounting Services | |
Data Processing Services | |
Exhibition & Conference Services | |
Health, Safety & Fire Protection Equipment | |
Industrial Design Services | |
Industrial Equipment Rental | |
Legal Services | |
Maintenance & Repair Services | |
Management Consulting Services | |
Office Equipment & Supplies Rental | |
Transaction & Payment Services | |
Translation & Interpretation Services | |
Other Business Support Services | |
Other Business Support Supplies | |
Business Support Supplies | |
Casinos & Gaming | |
Closed End Funds | |
Coal | |
Commercial Printing Services | |
Commercial REITs | |
Commodity Chemicals | |
Communications & Networking | |
Computer & Electronics Retailers | |
Computer Hardware | |
Construction & Engineering | |
Construction Materials | |
Construction Supplies & Fixtures | |
Consumer Lending* | |
Consumer Publishing | |
Corporate Financial Services* | |
Courier, Postal, Air Freight & Land-based Logistics | |
Department Stores | |
Discount Stores | |
Distillers & Wineries | |
Diversified Chemicals | |
Diversified Industrial Goods Wholesalers | |
Diversified Investment Services | |
Diversified Mining | |
Diversified REITs | |
Drug Retailers | |
Electric Utilities | |
Electrical Components & Equipment | |
Electronic Equipment & Parts | |
Employment Services | |
Entertainment Production | |
Environmental Services & Equipment | |
Exchange-Traded Funds | |
Financial & Commodity Market Operators & Service Providers | |
Fishing & Farming** | |
Agricultural Biotechnology | |
Agricultural Consultancy Services | |
Agriculture Support Services | |
Animal Breeding | |
Animal Feed | |
Aquaculture | |
Cattle Farming | |
Coffee, Tea & Cocoa Farming | |
Commercial Fishing | |
Commercial Nurseries | |
Fishing & Farming Wholesale | |
Fur Farming | |
Grain (Crop) Production | |
Hog & Pig Farming | |
Organic Farming | |
Poultry Farming | |
Sheep & Specialty Livestock Farming | |
Sugarcane Farming | |
Vegetable, Fruit & Nut Farming | |
Other Fishing & Farming | |
Food Processing | |
Food Retail & Distribution** | |
Beer, Wine & Liquor Stores | |
Food Markets | |
Food Wholesale | |
Supermarkets & Convenience Stores | |
Tobacco Stores | |
Vending Machine Providers | |
Other Food Retail & Distribution | |
Footwear | |
Forest & Wood Products | |
Gold | |
Ground Freight & Logistics | |
Healthcare Facilities & Services | |
Heavy Electrical Equipment | |
Heavy Machinery & Vehicles | |
Highways & Rail Tracks | |
Home Furnishings | |
Home Furnishings Retailers | |
Home Improvement Products & Services Retailers | |
Homebuilding | |
Hotels, Motels & Cruise Lines | |
Household Electronics | |
Household Products | |
Independent Power Producers | |
Industrial Conglomerates | |
Industrial Machinery & Equipment | |
Insurance Funds | |
Integrated Oil & Gas | |
Integrated Telecommunications Services | |
Investment Banking & Brokerage Services* | |
Investment Holding Companies | |
Investment Management & Fund Operators | |
Iron & Steel | |
IT Services & Consulting | |
Leisure & Recreation** | |
Adventure Sports Facilities & Ski Resorts | |
Amusement Parks and Zoos | |
Golf Courses | |
Guided Tour Operators | |
Gyms, Fitness and Spa Centers | |
Hunting & Fishing | |
Marinas | |
Movie Theaters & Movie Products | |
Museums & Historic Places | |
Professional Sports Venues | |
Public Sport Facilities | |
Theatres & Performing Arts | |
Travel Agents | |
Other Leisure & Recreation | |
Life & Health Insurance | |
Managed Healthcare | |
Marine Freight & Logistics | |
Marine Port Services | |
Medical Equipment, Supplies & Distribution | |
Mining Support Services & Equipment | |
Miscellaneous Specialty Retailers | |
Multiline Insurance & Brokers | |
Multiline Utilities | |
Mutual Funds | |
Natural Gas Utilities | |
Non-Alcoholic Beverages | |
Non-Gold Precious Metals & Minerals | |
Non-Paper Containers & Packaging | |
Office Equipment | |
Oil & Gas Drilling | |
Oil & Gas Exploration and Production | |
Oil & Gas Refining and Marketing | |
Oil & Gas Transportation Services | |
Oil Related Services and Equipment | |
Online Services** | |
Content & Site Management Services | |
E-commerce & Marketplace Services | |
Internet Gaming | |
Internet Security & Transactions Services | |
Search Engines | |
Social Media & Networking | |
Other Online Services | |
Paper Packaging | |
Paper Products | |
Passenger Transportation, Ground & Sea | |
Pension Funds | |
Personal Products | |
Personal Services** | |
Accounting & Tax Preparation | |
Child Care & Family Services | |
Consumer Goods Rental | |
Consumer Repair Services | |
Funeral Services | |
General Education Services | |
Personal Care Services | |
Personal Legal Services | |
Other Personal Services | |
Pharmaceuticals | |
Phones & Handheld Devices | |
Professional Information Services | |
Property & Casualty Insurance | |
Real Estate Rental, Development & Operations | |
Real Estate Services | |
Recreational Products | |
Reinsurance | |
Renewable Energy Equipment & Services | |
Renewable Fuels | |
Residential REITs | |
Restaurants & Bars | |
Semiconductor Equipment & Testing | |
Semiconductors | |
Shipbuilding | |
Software | |
Specialized REITs | |
Specialty Chemicals | |
Specialty Mining & Metals | |
Textiles & Leather Goods | |
Tires & Rubber Products | |
Tobacco | |
Toys & Children’s Products | |
UK Investment Trusts | |
Uranium | |
Water & Related Utilities | |
Wireless Telecommunications Services |
Price/Sales by Industry
Here are the price/sales ratio by industry, according to NYU.
The Price-to-Sales (P/S) Ratio measures how much investors are paying for each dollar of a company’s revenue. It’s calculated by dividing a company’s market capitalization by its total sales, or the price per share by sales per share.
This metric is especially useful for assessing companies that aren’t yet profitable, focusing solely on revenue. A high P/S ratio suggests strong growth potential, while a low ratio may indicate undervaluation or challenges. Comparing the P/S ratio to industry peers provides better context for its significance.
Industry | Price/Sale |
---|---|
Advertising | |
Aerospace/Defense | |
Air Transport | |
Apparel | |
Auto & Truck | |
Auto Parts | |
Bank (Money Center) | |
Banks (Regional) | |
Beverage (Alcoholic) | |
Beverage (Soft) | |
Broadcasting | |
Brokerage & Investment Banking | |
Building Materials | |
Business & Consumer Services | |
Cable TV | |
Chemical (Basic) | |
Chemical (Diversified) | |
Chemical (Specialty) | |
Coal & Related Energy | |
Computer Services | |
Computers/Peripherals | |
Construction Supplies | |
Diversified | |
Drugs (Biotechnology) | |
Drugs (Pharmaceutical) | |
Education | |
Electrical Equipment | |
Electronics (Consumer & Office) | |
Electronics (General) | |
Engineering/Construction | |
Entertainment | |
Environmental & Waste Services | |
Farming/Agriculture | |
Financial Svcs. (Non-bank & Insurance) | |
Food Processing | |
Food Wholesalers | |
Furn/Home Furnishings | |
Green & Renewable Energy | |
Healthcare Products | |
Healthcare Support Services | |
Heathcare Information and Technology | |
Homebuilding | |
Hospitals/Healthcare Facilities | |
Hotel/Gaming | |
Household Products | |
Information Services | |
Insurance (General) | |
Insurance (Life) | |
Insurance (Prop/Cas.) | |
Investments & Asset Management | |
Machinery | |
Metals & Mining | |
Office Equipment & Services | |
Oil/Gas (Integrated) | |
Oil/Gas (Production and Exploration) | |
Oil/Gas Distribution | |
Oilfield Svcs/Equip. | |
Packaging & Container | |
Paper/Forest Products | |
Power | |
Precious Metals | |
Publishing & Newspapers | |
R.E.I.T. | |
Real Estate (Development) | |
Real Estate (General/Diversified) | |
Real Estate (Operations & Services) | |
Recreation | |
Reinsurance | |
Restaurant/Dining | |
Retail (Automotive) | |
Retail (Building Supply) | |
Retail (Distributors) | |
Retail (General) | |
Retail (Grocery and Food) | |
Retail (REITs) | |
Retail (Special Lines) | |
Rubber& Tires | |
Semiconductor | |
Semiconductor Equip | |
Shipbuilding & Marine | |
Shoe | |
Software (Entertainment) | |
Software (Internet) | |
Software (System & Application) | |
Steel | |
Telecom (Wireless) | |
Telecom. Equipment | |
Telecom. Services | |
Tobacco | |
Transportation | |
Transportation (Railroads) | |
Trucking | |
Utility (General) | |
Utility (Water) | |
Total Market | |
Total Market (without financials) |
Pros and Cons of EBITDA Multiples
There are advantages and disadvantages to using EBITDA to measure a company’s value.
Pros:
- Simplifies Comparisons Across Companies: It focuses on a company's core operations without variables like debt and taxes, making it easier to compare businesses across different industries or regions
- Removes Non-Operational Factors: Excluding interest, taxes, depreciation, and amortization allows for a clearer view of a company's performance
- Good for Evaluating Large Acquisitions: EBITDA is often used in mergers and acquisitions to assess the value of a company's ongoing earnings
- Focus on Cash Flow Potential: It provides insight into the company's potential to generate cash flow, which investors need
- Useful for Leveraged Companies: It’s great for evaluating companies with a lot of debt or capital structures
- Helps Evaluate Profitability: It's effective in assessing whether a company can generate profit from its operations without being affected by financing or tax strategies
Cons:
- Ignores Capital Expenditures: EBITDA overlooks important capital expenditures, which can be misleading for industries that require heavy investment in assets
- Not a Cash Flow Metric: EBITDA focuses on earnings but doesn’t directly measure cash flow, which is important in determining financial health
- Can Be Manipulated: Companies can present a more favorable picture by emphasizing EBITDA, glossing over important financial issues such as debt servicing and operational inefficiencies
- Excludes Changes in Working Capital: EBITDA doesn’t account for fluctuations in working capital, which can significantly impact cash flow
- Overlooks Taxes and Interest: It removes interest and tax expenses, which can obscure the real financial burden faced by highly leveraged companies
- Skewed for High-Capital-Intensive Businesses: For industries with significant capital investments (like manufacturing or energy), EBITDA can overestimate profitability by ignoring depreciation, leading to an incomplete view
EBITDA vs Other Valuation Metrics
Taking into account these cons, you may want to look further into other valuation metrics, depending on the industry your business is in, its size, and other special considerations unique to your company.
Check out these alternative options to EBITDA and see if they may be a better fit for your business:
- Net Income
- What it is: Net Income is the profit remaining after all expenses, including interest, taxes, and depreciation, have been deducted from total revenue.
- Difference from EBITDA: Unlike EBITDA, which focuses solely on core operating profit, Net Income considers the full impact of financial and tax-related decisions, providing a “bottom-line” view.
- When to use: Net Income may be a better metric for businesses with high debt, complex tax structures, or significant non-operational expenses, as it reflects the actual earnings available to shareholders.
- Revenue Multiples
- What it is: Revenue Multiples are valuation metrics that express the value of a business as a multiple of its total sales or revenue.
- Difference from EBITDA: Revenue Multiples don’t account for profitability, making them distinct from EBITDA, which focuses on the operating earnings aspect. They’re more relevant to businesses prioritizing growth over immediate profit.
- When to use: Revenue Multiples are useful for high-growth or early-stage companies with limited profitability, as they allow valuation based on revenue potential rather than current earnings.
- Discounted Cash Flow (DCF)
- What it is: DCF is a valuation method that calculates the present value of projected future cash flows, adjusted by a discount rate to account for the time value of money.
- Difference from EBITDA: While EBITDA looks at current operating earnings, DCF considers long-term cash flow potential, which can be essential for businesses with significant growth opportunities or planned future expansion.
- When to use: DCF is ideal for businesses with predictable cash flows and growth potential, allowing investors to evaluate a company's value based on future earnings, rather than just its current profitability.
Frequently Asked Questions
What is the SaaS multiple for 2024?
The SaaS multiple for 2024 is around 6.
How much is a business worth with $2 million in sales?
Depending on the industry, a business with $2 million in sales is worth anywhere between $1 million (with a 0.5X multiplier) up to $10 million (with 5X multiplier).
What is the average multiple for a business valuation?
The average multiple for a business valuation ranges between 1.5x-3x.
What is a typical multiple of revenue?
A typical multiple of revenue, depending on other factors like industry, is 1 or 2.