Most business owners either undervalue what they have built or anchor to a number a broker told them years ago. A credible valuation starts with the same data a buyer's lender will request — and the same multiples active buyers are paying in the current market.
The right method depends on your business size, industry, and ownership structure. Applying the wrong method produces a number no buyer will accept.
Main-Street SMB (under $2M revenue)
Seller's Discretionary Earnings — net income plus owner's salary, benefits, and one-time expenses. Used for owner-operated businesses where the owner is the primary value driver. Buyers pay 1.5×–4× SDE depending on industry, growth, and systems.
Best for:
Restaurants, retail, trades, cleaning, convenience stores
Lower Mid-Market ($2M–$20M revenue)
Earnings Before Interest, Tax, Depreciation and Amortisation — used when a business has a management layer and the owner is not the sole operator. Lenders and institutional buyers use EBITDA as the normalised earnings base. Multiples range from 3×–8× depending on sector.
Best for:
Dental practices, medical clinics, SaaS, professional services
Asset-Heavy or Distressed Businesses
When earnings are low or inconsistent, buyers anchor to net asset value — equipment, inventory, real estate, and goodwill. Common in gas stations (real estate), laundromats (equipment), and distressed businesses. Often a floor, not a ceiling.
Best for:
Gas stations with owned land, equipment-heavy businesses, distressed sales
These are current market ranges for BC and Canadian SMB transactions. The range reflects the spread between a well-prepared exit and a distressed or poorly documented one.
| Industry | Metric | Multiple Range | Key Variable |
|---|---|---|---|
| Restaurants | SDE | 1.5× – 2.5× | Lease quality and POS data are key |
| HVAC & Trades | SDE | 2× – 3.5× | Service contracts lift the multiple |
| Dental Practices | EBITDA | 4× – 6× | Active patient count drives value |
| SaaS & Tech | ARR | 3× – 8× | Churn rate is the #1 variable |
| Cleaning & Janitorial | SDE | 1.5× – 2.5× | Commercial contracts > residential |
| Childcare & Daycare | SDE | 2× – 4× | Licence and waitlist are assets |
Ranges are indicative. Actual multiples depend on deal size, market conditions, and individual business factors.
Buyers do not pay for potential — they pay for proof. These five factors have the largest impact on the multiple a qualified buyer will offer. Each one is buildable before you go to market.
Recurring or Contracted Revenue
Monthly service contracts, SaaS subscriptions, or annual maintenance agreements reduce buyer risk. Businesses with 60%+ recurring revenue command premium multiples.
Management Layer in Place
A business that runs without the owner is worth materially more than one that shuts down when you leave. An operations manager or team lead adds 0.5×–1× to the multiple.
Consistent Growth Trend
3 years of revenue growth — even modest 10–15% per year — signals a business gaining momentum. Flat or declining revenue requires a defensive discount.
Customer Diversification
No single customer representing more than 15–20% of revenue. Concentration risk is one of the most common deal-killers in due diligence.
Clean, Recast Books
Three years of well-documented, recast financials reduce lender friction and buyer hesitation. Every unexplained add-back is a negotiating chip the buyer will use against you.
$7,500 non-refundable engagement fee, credited toward the success fee. Reverse Lehman: 10% on first $1M, 8% on $1M–$2M, 6% on $2M–$3M, 4% above $3M. Minimum $25,000 success fee.
10%
First $1M
8%
$1M – $2M
6%
$2M – $3M
4%
Above $3M
Seller Resources
Industry Sell Pages