The short answer: A valuation multiple is the number you multiply earnings by to get price: price = SDE × multiple. In 2026 the median small business sold at about 2.7× SDE (overall average ~2.5×), but industry ranges run from ~2.26× for restaurants to ~4.7× for car washes. Within any industry, recurring revenue, low owner dependence, clean books, and growth push the multiple up; owner dependence, customer concentration, and messy books push it down.
What a multiple actually is
Buyers don't pay for revenue, they pay for earnings, and the multiple sets the rate. A 2.7× multiple means a buyer pays $2.70 for every $1 of yearly SDE. Flip it over and a multiple is a payback period: 2.7× SDE is roughly 2.7 years of earnings to get your money back.
2026 SDE multiples by industry
Different industries trade at different multiples because their risk, recurring revenue, and asset base differ. These are typical 2026 SDE multiples, the starting point before you adjust for the specific business.
| Industry | SDE multiple | Why it lands there |
|---|---|---|
| Car wash | ~4.7× | Real estate + recurring, semi-passive cash flow |
| Laundromat | ~4.1× | Low labor, steady demand, hard assets |
| HVAC | ~2.8× | Service contracts help; skilled-labor dependent |
| Plumbing | ~2.6× | Steady demand, often owner-led sales |
| Accounting practice | ~2.33× | Recurring clients, but relationship-driven |
| Restaurant | ~2.26× | Thin margins, high failure rate, owner-intensive |
Source: BizBuySell Insight Report (2026). Full set: industry multiples. The 2026 median across all small businesses was ~2.7× SDE; the overall average ~2.5×.
What moves a multiple up or down
The industry gives you a range. Where in that range a specific business lands comes down to risk and durability. Here's the two-sided list buyers actually use:
| Pushes the multiple UP | Pushes the multiple DOWN |
|---|---|
| Recurring or contracted revenue | One-off, project-based revenue |
| Runs without the owner (a manager in place) | Owner is the business |
| Clean, verifiable books | Messy or cash-heavy records |
| Diverse customer base | One client is a big share of sales |
| Steady or growing revenue | Declining revenue |
| Larger earnings (size premium) | Very small / fragile earnings |
| Long lease or owned real estate | Short remaining lease |
The size premium is real
Bigger businesses get higher multiples because they're less risky, more management depth, more customers, steadier cash flow. A company earning $800k typically sells above an identical one earning $150k, even in the same industry.
Worked example: placing a business in its range
An HVAC company earns $200,000 SDE. The industry starts around 2.8×. Now we adjust for its actual traits:
| Factor | Effect | Running multiple |
|---|---|---|
| HVAC industry starting point | 2.8× | |
| 40% revenue on service contracts | + | 3.0× |
| Two techs run installs; owner mostly sells | − | 2.8× |
| Biggest customer = 8% of sales (diverse) | + | 2.9× |
| Clean books, 3 years of tax returns | + | 3.0× |
| Value = $200,000 × 3.0× | $600,000 |
Same $200k SDE, but the quality traits earned a 3.0× instead of a 2.6×, a $80,000 swing in value. That's why the multiple is a judgment, not a lookup.
The industry sets the range. The business earns its place inside it.
See the range for any deal
Pick an industry and enter SDE for a low-mid-high value range in seconds.
Keep going
Frequently asked questions
A valuation multiple is the number you multiply earnings by to get price. For small businesses, price = SDE × multiple. A $150,000-SDE business at 2.7× is priced around $405,000.
The 2026 median was about 2.7× SDE (overall average ~2.5×). Ranges vary: ~2.26× restaurants, ~2.6× plumbing, ~2.8× HVAC, ~4.1× laundromats, ~4.7× car washes. See multiples by industry.
Recurring revenue, low owner dependence, clean books, a diverse customer base, steady growth, and larger size all push multiples up. Owner dependence, customer concentration, messy records, and declining revenue push them down.
Larger businesses are usually less risky, management depth, more customers, steadier cash flow, so buyers pay more per dollar of earnings. That size premium means an $800k-earning business typically sells above an identical $150k one.
Sources
- Median (~2.7× SDE), average (~2.5×), and industry multiples, BizBuySell Insight Report (2026).
- Full multiples table, Acquisition Ace multiples data (2026).
