A multiple is a summary of a judgment, not the judgment itself. Understanding what sits behind it is what lets you argue about the right things.
Start a private conversation with the Acquisition Concierge, already scoped to valuation & multiples. Pick a starting point, or describe your situation directly.
Private-company valuation resolves to two numbers that are each more contestable than they appear: what the business actually earns, and what a buyer should pay for each unit of it. The first is an accounting question that diligence answers, normalized earnings, once the owner's personal expenses, one-off items and the costs of running the business as a standalone entity are all properly reflected. The second is a risk judgment. A multiple encodes how durable those earnings look, how dependent they are on people who may leave, how concentrated among customers who may not stay, and how much capital the business consumes to keep producing them. Buyers who negotiate over the multiple while accepting the earnings figure are usually arguing about the smaller of the two numbers.
Two businesses with identical EBITDA can be worth materially different amounts. These are the reasons, roughly in order of how much they matter.
Contracted and recurring revenue supports a higher multiple than project or transactional revenue, because the earnings are more likely to persist.
Dependence on a small number of customers is the single most common drag, especially where the relationship sits with the departing owner.
A business that runs without its owner is worth more than the same business that does not, because what is transferable is what is being bought.
A second layer capable of running the company reduces both integration risk and the buyer's own bandwidth problem.
Demonstrated growth in a structurally healthy market, distinguished carefully from a good recent year.
Maintenance capital expenditure and working-capital demands determine how much of reported EBITDA becomes cash you can use.
How valuation is approached in practice.
Price is the input every later decision inherits, most immediately, how much debt the combined business must carry.
Nothing here is a valuation opinion or a multiple for your target. Where a number is needed for a dispute, a tax position, a shareholder matter or a lender, that calls for a credentialed valuation professional, which the Institute can help you identify.
Mostly from private transaction databases assembled by intermediaries and appraisers, populated with self-reported deals. They are useful for orientation and genuinely bad for precision. Reporting is voluntary and skewed toward transactions that closed and that someone chose to report; the accompanying financial detail is thin; and "comparable" is doing enormous work when businesses differ in concentration, owner dependence and revenue quality. Use them to know whether you are in a four-times or an eight-times sector, not to establish what a specific company is worth.
Frequently a great deal, and the gap is a recurring source of late-stage friction. Enterprise value is the value of the operating business. What the seller actually receives is that figure adjusted for debt repaid at closing, cash retained, a working-capital settlement against an agreed target, escrow or holdback amounts, transaction fees, and taxes, with any earnout or seller note deferred and contingent. A seller focused on the headline number can be genuinely shocked at closing, which is a conversation better had early than at signing.
As little as possible, as a matter of discipline. Synergies are value you create through your own work after closing; paying for them in advance transfers that value to the seller and leaves you carrying the execution risk. Where competitive pressure forces some of it into the price, the useful practice is to pay only for synergies squarely within your own control, a facility consolidation you will definitely execute, a role that genuinely disappears, and never for revenue synergies, which depend on customers behaving as hoped.
When a number needs to withstand challenge by someone other than the seller: a lender requiring independent support, a tax position, an ESOP, a shareholder or matrimonial dispute, or litigation. For negotiating a purchase, a formal valuation is usually unnecessary, your own normalized earnings analysis and a defensible view of the multiple do the work, and the price is settled by negotiation rather than by an appraisal. Commissioning one to strengthen a negotiating position rarely repays its cost.
Describe the business and what you have been shown. The Concierge will orient you on the drivers, it will not give you a number.