Knowing what a company is worth is one of the most important questions a business owner can ask, but also one of the hardest to answer.
There is no single formula or universal figure.
In this webinar, we take a practical look at how an SME is valued, which methods are used, why EBITDA carries so much weight in business sales, and which factors can push the multiple up or down.
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One of the first distinctions we covered was the difference between value and price. Value is an estimate — what a buyer might be willing to pay based on financial, operational, and market criteria. The usual approach is to work with a reasonable valuation range, not an exact figure. Price is the outcome of a negotiation — it depends on the number of interested buyers, the quality of the business, the deal terms, and the strategic value the company holds for a specific buyer.
Understanding this difference matters because it prevents two common mistakes: thinking the valuation is a fixed, immovable number, or assuming any figure is negotiable without justification. The valuation sets the range; the negotiation determines where within that range the deal closes.
EBITDA is the most widely used metric for valuing SMEs because it reflects the business's ability to generate operating profit, regardless of its financial structure. But book EBITDA doesn't always reflect the business's real, recurring profitability.
In an M&A deal, the buyer builds an adjusted EBITDA that corrects for items that don't reflect the company's ordinary operations: the founder's personal expenses charged to the company, owner salaries above or below market, related-party rents at unrepresentative prices, extraordinary expenses, and one-off income that won't recur. The goal isn't to inflate earnings, but to understand what profitability the company would generate under a normal, sustainable structure.
The multiple shows how many times EBITDA a buyer is willing to pay. The industry provides an initial benchmark, but the final multiple depends above all on the quality of the business and the perceived risk.
The factors that justify higher multiples are recurring revenue, sustained growth, a diversified customer base, stable margins, an autonomous management team, documented processes, low founder dependency, and clear opportunities for growth or international expansion. Strategic value to a specific buyer can also play a role — a strategic buyer that captures synergies may pay more than a financial buyer.
The factors that lower the multiple are excessive customer concentration, founder dependency, unreliable financial information, highly variable results from year to year, significant investment needs, no second line of management, and unresolved legal or tax risks.
Ultimately, the multiple is a way of expressing risk. The more predictable, autonomous, and scalable the company, the better the multiple it can defend.
During the webinar, we shared real data from activity on Deale. Among the industries with the highest benchmarks was security, at roughly 6.8x EBITDA, followed by mining, oil, and gas at around 6x and energy and utilities at approximately 5.4x.
Industries such as cleaning services, distribution and wholesale, finance and insurance, and manufacturing ranged from 4.2x to 4.9x. Communications and technology, professional services, and education came in at around 4x within the sample analyzed.
But these figures are benchmarks, not verdicts. Two companies in the same industry can receive very different multiples. A cleaning company with recurring contracts, a diversified portfolio, and little dependence on the owner can sit at the top of the range. A similar company with one customer accounting for 60% of revenue and heavy founder dependency will receive a significantly lower valuation.
To wrap up, we used a case study with a fictional company, Tecnomant Servicios Industriales, which generates €5 million in revenue and reports book EBITDA of €1.2 million.
When reviewing the accounts, we found two adjustments. The owner's salary was higher than what an outside executive would earn at market rates — the €120,000 difference is added back to EBITDA. The rent on the facilities, owned by the partner, was above market price — the €80,000 difference is also added back. After normalization, EBITDA went from €1.2 million to €1.4 million.
With a multiple range of 4x to 5x, enterprise value came in between €5.6 million and €7 million. To get to the value shareholders receive, net debt had to be subtracted: €800,000 in bank debt minus €300,000 in excess cash. The resulting equity value was between €5.1 million and €6.5 million.
The most revealing part of the exercise was the multiplier effect. The two adjustments added €200,000 to EBITDA. But once the multiple was applied, that €200,000 turned into an additional €800,000 to €1 million in enterprise value. That's why properly adjusting EBITDA before starting a sale process is one of the highest-return decisions a business owner can make.
The key takeaway from the webinar was that valuing a company isn't about mechanically applying a multiple to EBITDA. You need to understand what EBITDA is truly sustainable, what risks exist, how good the business is, what prospects it offers, and which buyers might be interested.
Knowing the value shouldn't just tell you what the company could sell for today. It also helps you identify what can be improved to build a more valuable company in the future. And that's the central idea: value doesn't start being negotiated when a buyer shows up. It's built long before.
If you want to understand in detail the full stages of a business sale, how due diligence works, or how to prepare with the 6 keys before meeting with buyers, we've published practical guides on each topic.
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