EBITDA Multiples: What They Are and Multiples by Sector in Spain

EBITDA multiples are the most widely used method for valuing companies in mergers and acquisitions (M&A). If you've ever heard “that company sold for 5x EBITDA,” you were hearing a valuation multiple.

In this guide, we explain exactly what they are, how they're calculated, which multiples are typical in Spain by sector and investor type (with real data from the Spanish market), how to interpret them, and how they differ from other valuation methods such as discounted cash flow (DCF).

What EBITDA multiples are

A valuation multiple is a ratio that relates a company's price to a benchmark financial metric. In the case of the multiple of EBITDA, that benchmark is the company's ability to generate operating profit before interest, taxes, depreciation, and amortization.

Their appeal lies in their simplicity: with a single number (the multiple) and a specific metric (EBITDA), you can compare companies of different sizes, sectors, and countries. That's why investors, private equity firms, and strategic buyers use it as a quick benchmark to assess opportunities.

The basic formula is:

Enterprise Value (EV) = EBITDA × Sector multiple

Here, enterprise value (EV) is the total value of the company, including debt and cash. To arrive at the price the seller receives (equity value), you subtract net debt and adjust for other items.

How EBITDA multiples are calculated

There are two ways to work with multiples:

1. Calculating the multiple of a specific company: divide its enterprise value by its EBITDA. This is the “historical multiple” when looking at closed deals.
2. Applying a sector multiple to value a company: multiply the company's recurring EBITDA by the average multiple for its sector. This is the method used to estimate value ahead of a transaction.

📊 A practical example of valuation by multiples

Let's imagine a Spanish industrial company with the following annual figures:

1. Revenue: €3,000,000
2. EBITDA: €600,000
3. Net debt: €400,000
4. Average multiple for the industrial sector: 5x

Applying the multiple:

Enterprise Value = €600,000 × 5 = €3,000,000Equity Value = €3,000,000 − €400,000 = €2,600,000

In other words, the seller would receive roughly €2.6 million, with the debt assumed or repaid as part of the deal. Of course, this is only a rough estimate: the actual multiple is adjusted during financial due diligence and depends on factors such as growth, customer concentration, the team, and so on.

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EBITDA multiples by sector in Spain

Multiples vary enormously by sector. At Deale, we analyze M&A deals involving Spanish SMEs to identify the sectors with the highest multiples.

Arts and entertainment leads with multiples close to 6.5x EBITDA, followed by Agriculture, forestry, and fishing (5.2x). At the other end, sectors such as Security (2.2x) and Manufacturing (3.1x) have lower multiples due to higher capital intensity and tighter operating margins.

These figures reflect a key reality of M&A: two companies with the same EBITDA can have very different valuations depending on their sector. A professional services SME with €500,000 in EBITDA might be valued at around €1.6M, while a similar company in hospitality or healthcare could reach €2.1M.

Beyond the sector, multiples are also affected by factors such as:

1. Company size: larger companies tend to command higher multiples because of their lower perceived risk.
2. Historical growth: a company growing 15% a year commands higher multiples than one that is flat or declining.
3. Revenue recurrence: subscription models (SaaS, maintenance, multi-year contracts) trade at higher multiples.
4. Customer dependency: a diversified customer base is worth more than one where a single customer accounts for >30% of the total.
5. Quality of the management team: a professional team that doesn't depend on the founder raises the multiple.
6. Competitive position: recognized brands, technological advantages, or barriers to entry justify premiums.

Average multiple by buyer type

Not all buyers offer the same multiples. The investor type is one of the most decisive factors in the final valuation, since each profile has a different investment thesis, time horizon, and return requirements.

Strategic buyers pay the highest multiples (5.38x EBITDA on average). It makes sense: they are buying to integrate the company into their existing business and capture operational, commercial, or industrial synergies that justify paying a premium.

In second place, family offices (5.02x) tend to offer high multiples because they have a longer investment horizon and can afford more patient returns than a traditional fund.

Private equity firms (4.73x) sit somewhere in the middle: they apply strict financial criteria but can stretch the multiple when they see a clear opportunity to create value within 5–7 years.

Individual investors (4.42x) and search funders (4.15x) tend to offer more conservative multiples. This is because they finance the purchase with leverage (debt) and need structures in which the business's cash flow comfortably covers the debt. To dig deeper, read our guide on what an LBO is.

This difference has a practical implication for the seller: who you sell to matters as much as the price. A deal with a strategic buyer can generate more value but requires more integration; a deal with a fund can be faster but come with stricter financial terms.

How to interpret an EBITDA multiple

A multiple on its own doesn't tell you whether a company is expensive or cheap. It only makes sense when compared with:

1. The average multiple for the sector (the most important).
2. The multiples of recent comparable transactions.
3. The evolution of the company's multiple in previous deals (if any).

If the multiple is lower than the sector average, the company may be undervalued (an investment opportunity) or there may be an underlying problem (declining profitability, high customer dependency, poor management).

If the multiple is higher than the average, the company may be overvalued or it may have superior characteristics that justify the premium: strong growth, recurrence, market position, an exceptional team.

In real deals, multiples are also affected by the deal structure: an outright cash sale carries a different multiple than a deal with an earn-out tied to future milestones, where the buyer takes on less risk and usually offers higher multiples.

EBITDA multiples vs. discounted cash flow

The two most widely used methods for valuing companies in M&A are EBITDA multiples and discounted cash flow (DCF). Although they may look like alternatives, in practice they are complementary:

1. EBITDA multiples: a relative valuation, based on how similar companies are valued in the market. Fast, simple, and very useful for companies with a stable track record.
2. DCF: an intrinsic valuation, based on the company's future ability to generate free cash flow. More complex, and ideal for companies that are growing, transforming, or operating in new sectors.

In mature M&A deals, advisors usually run both methods in parallel to validate the valuation: if both produce similar values, the valuation is robust. If they differ widely, you need to understand why and adjust the assumptions.

Frequently asked questions about EBITDA multiples

Why use EBITDA and not another metric?

Because EBITDA is the metric that best reflects the company's pure operating profitability, stripping out differences in financial structure (debt), depreciation policies, and tax regime. This makes it possible to compare companies in very different situations objectively.

What happens if the company has negative EBITDA?

If EBITDA is negative, EBITDA multiples don't apply and you have to turn to other methods: revenue multiples (typical in SaaS and high-growth companies), DCF, asset-based valuation, or qualitative methods. A company with sustained negative EBITDA usually has serious operational problems that affect its valuation.

Is the multiple applied to last year's EBITDA or to an average?

It's usually applied to the recurring EBITDA of the last closed fiscal year or to an average of the last three years, adjusted to remove one-off items. For companies with high volatility or a clear trend (upward or downward), the calculation is adjusted according to where they are in the cycle.

Why do two companies in the same sector have different multiples?

Because of all the factors we mentioned earlier: size, growth, recurrence, customer concentration, team, competitive position, location, and so on. Two companies with the same EBITDA can have very different valuations depending on the quality of that EBITDA and the risk perceived by the buyer.

How is the average sector multiple obtained?

Sector multiples are calculated from recent real deals published in M&A databases, consulting firm reports, or, as with Deale's data, from transactions closed on specialized platforms. It's important to use data from the local market (Spain, in our case), because multiples vary widely between countries.