EBITDA Multiples in a Business Sale: How Are They Used to Set the Price?

When advisors and buyers talk about a business being "worth 3 times EBITDA" or "6 times EBITDA", they're referring to the EBITDA multiple – one of the most commonly used shortcuts for pricing a business.

What is an EBITDA multiple?

The multiple is simply a factor you multiply the company's (normalised) EBITDA by to arrive at the company's Enterprise Value. A business with a normalised EBITDA of DKK 5m and a multiple of 5x is thus valued at roughly DKK 25m in Enterprise Value.

What determines whether the multiple is high or low?

Industry

Software and service businesses with recurring revenue typically trade at higher multiples than, say, construction businesses with project-based revenue.

Size

Larger businesses generally trade at higher multiples than smaller ones — partly because the risk is perceived as lower, partly because more professional buyers (private equity) are interested.

Growth and predictability

Stable, predictable growth is rewarded significantly more than volatile earnings — even at the same average EBITDA.

Owner dependency

If the business is highly dependent on you personally, the multiple is typically pushed down — no matter how good the accounts look.

Enterprise Value vs. what you actually receive

The multiple gives you Enterprise Value — not necessarily the price you walk away with. See the difference explained in Enterprise Value vs. Equity Value.

Frequently asked questions

What multiple is "normal" for a smaller Danish business?

There's no single right answer — it depends on industry, size and growth. An advisor with insight into comparable deals can give you a realistic estimate, far better than a general rule of thumb.

Can I do anything myself to raise the multiple?

Yes — recurring revenue, lower owner dependency, and documented, predictable growth are the factors that historically lift the multiple the most. See our guide to sale preparation.

Why does a QoE analysis affect the multiple?

Because the multiple is applied to the EBITDA the buyer actually trusts. If a Quality of Earnings analysis uncovers one-off items, the basis for the calculation drops — and with it the price, even with an unchanged multiple.