Financial Analysis
Industry Rule-of-Thumb Multiples
Quick-reference valuation multiples, varying by industry, used as an initial benchmark when estimating the value of a small business before applying deal-specific adjustments.
Informal, industry-specific valuation multiples derived from observed transaction patterns rather than formal appraisal methodology. Typically expressed as a range applied to SDE or EBITDA (for example, accounting firms at 2.0 to 3.5x SDE, HVAC businesses at 2.5 to 4.0x SDE). Published sources include the Business Reference Guide and transaction databases such as DealStats and BizBuySell. Rule-of-thumb multiples serve as a preliminary reference point; actual transaction pricing reflects deal structure, business risk, growth profile, and financing terms. (Also see: Valuation Multiple, SDE, Comparable Transactions.)
Related terms
- Seller's Discretionary Earnings (SDE)
- Valuation Multiple
- Comparable Transactions (Comps)
- EBITDA
- Discounted Cash Flow (DCF)
- Add-back