EBITDA Multiple — Smart Financial Analysis
Compare enterprise value to EBITDA. Apple 23.7x, small biz 5x, CrowdStrike 100x. The lingua franca of M&A.
Why This Matters for Your Finances
Why: The EV/EBITDA multiple (enterprise value to earnings before interest, taxes, depreciation, and amortization) tells you how many years of EBITDA you are paying to acquire a compa...
How: Enter Market Cap ($), Total Debt ($), Minority Interest ($) to get instant results. Try the preset examples to see how different scenarios affect the outcome, then adjust to match your situation.
- ●There is no universal good multiple—it varies by industry and growth.
- ●Information technology: 12–20x median.
- ●EV/EBITDA includes debt and excludes cash—Enterprise Value = market cap + debt - cash.
- ●Every M&A deal uses EV/EBITDA.
EBITDA Multiple Calculator
EV ÷ EBITDA. Small biz 5x, Apple 24x, CrowdStrike 100x. The lingua franca of M&A.
Real Company Examples — Click to Load
Enterprise Value Components
EBITDA Multiple Comparison
Multiple by Industry
EV vs EBITDA (Concept)
Valuation Breakdown
⚠️For educational purposes only — not financial advice. Consult a qualified advisor before making decisions.
💡 Money Facts
EBITDA Multiple analysis is used by millions of people worldwide to make better financial decisions.
— Industry Data
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The EV/EBITDA multiple is the lingua franca of M&A—it tells you how many years of EBITDA you are paying to acquire a company. A small business sells for 4–6x EBITDA while CrowdStrike trades at 100x. When KKR bought Twitter for $44B at 30x+ EBITDA, Elon Musk called it a deal. When PE firms buy a plumber at 5x, that is their sweet spot.
Key Takeaways
- • EV = Market Cap + Debt + Minority Interest + Preferred - Cash
- • EBITDA Multiple = EV ÷ EBITDA. Years of EBITDA to pay for the business.
- • Small biz 4–6x; tech premium 15–25x; hypergrowth 50–100x.
- • EV/EBITDA vs P/E: EV includes debt, excludes cash; P/E is equity-only.
Why EBITDA Multiples Vary
CrowdStrike at 100x vs a small plumbing business at 5x reflects fundamental drivers: growth rate (higher growth = higher multiple), capital intensity (asset-light SaaS vs asset-heavy manufacturing), business risk (stable recurring revenue vs cyclical), margin profile (high-margin software vs thin-margin retail), competitive moat (network effects, IP), and market sentiment. Tech commands premium multiples for growth; utilities trade at discounts for capital intensity and regulation.
| Driver | Higher Multiple | Lower Multiple |
|---|---|---|
| Growth | High revenue growth | Mature, slow growth |
| Capital | Asset-light (SaaS) | Capital-intensive |
| Risk | Stable, recurring | Cyclical, volatile |
| Margins | High EBITDA margin | Thin margins |
Did You Know?
Apple trades at ~24x EV/EBITDA—premium for brand, ecosystem, and cash generation.
— Bloomberg
Walmart at ~12x reflects stable retail—predictable cash flows, lower growth.
— S&P Capital IQ
CrowdStrike at 100x—hypergrowth SaaS commands premium for revenue growth.
— PitchBook
Main street businesses (plumbers, HVAC) sell for 4–6x—PE sweet spot.
— IBBA
KKR bought Twitter for $44B at 30x+ EBITDA—Musk called it a deal.
— SEC filings
EV/EBITDA normalizes across debt and tax—preferred for M&A comparables.
— Damodaran NYU
How EV/EBITDA Is Calculated
Enterprise Value = Market Cap + Total Debt + Minority Interest + Preferred Shares - Cash. Divide by EBITDA (trailing or forward) to get the multiple. Higher multiples mean the market values more years of EBITDA—growth, margins, and risk drive the spread.
EBITDA Multiple = Enterprise Value ÷ EBITDA
EV captures total acquisition cost; EBITDA measures operating profit before interest, taxes, and D&A. The multiple answers: how many years of EBITDA would it take to pay for the company?
Step 1: Enterprise Value
EV = Market Cap + Debt + Minority Interest + Preferred - Cash. This is the total cost to acquire the entire business, including assuming its debt and pocketing its cash.
Step 2: Divide by EBITDA
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. Use trailing 12 months (TTM) or forward estimates. The quotient is the multiple—years of EBITDA to pay for the company.
Expert Tips
Pro tip: When PE firms buy a main street business at 5x EBITDA, they often target 20–25% IRR. The multiple reflects risk, growth, and capital structure. Synergies in strategic M&A justify premium multiples.
EBITDA Multiples by Industry
| Industry | Median (x) | Typical Range |
|---|---|---|
| Information Technology | 15.5 | 12–20x |
| Healthcare | 11.3 | 9–15x |
| Consumer Discretionary | 10.5 | 8–14x |
| Industrials | 8.9 | 7–12x |
| Energy | 6.5 | 5–9x |
| Wholesale / Main Street | 4.6 | 4–7x |
EV/EBITDA vs P/E Ratio
EV/EBITDA and P/E serve different purposes. EV/EBITDA normalizes for capital structure (debt vs equity) and tax situations. P/E is equity-only and uses net income. For leveraged companies or M&A comparables, EV/EBITDA is preferred. For mature, stable companies with low debt, P/E remains useful.
| Metric | Numerator | Denominator | Use Case |
|---|---|---|---|
| EV/EBITDA | EV (includes debt, -cash) | EBITDA | M&A, PE, comparables, leveraged firms |
| P/E | Market Cap | Net Income | Equity valuation, mature firms, low debt |
EV/EBITDA can be used for companies with negative net income but positive EBITDA. P/E breaks when earnings are negative.
FAQ
What is the EV/EBITDA multiple?
The EV/EBITDA multiple (enterprise value to earnings before interest, taxes, depreciation, and amortization) tells you how many years of EBITDA you are paying to acquire a company. Formula: EV ÷ EBITDA. It is the lingua franca of M&A—small businesses sell for 4–6x while hypergrowth SaaS can trade at 100x.
What is a good EBITDA multiple?
There is no universal good multiple—it varies by industry and growth. Tech premium: 15–25x. Retail stable: 8–12x. Pharma: 8–12x. Industrial: 10–16x. Small business main street: 4–6x. M&A average: 10–15x. Compare to industry peers and historical norms.
EBITDA multiples by industry?
Information technology: 12–20x median. Consumer discretionary: 8–14x. Healthcare: 9–15x. Industrials: 7–12x. Energy: 5–9x. Utilities: 6–9x. Wholesale trade: 4–7x. Growth rate and capital intensity drive the spread.
EV/EBITDA vs P/E ratio?
EV/EBITDA includes debt and excludes cash—Enterprise Value = market cap + debt - cash. P/E uses only equity value and net income. EV/EBITDA normalizes across capital structures and tax situations. M&A and PE prefer EV/EBITDA for comparables; P/E for mature, stable companies.
EBITDA multiples in M&A?
Every M&A deal uses EV/EBITDA. KKR bought Twitter for $44B at 30x+ EBITDA—Elon Musk called it a deal. PE firms buy main street businesses at 5x EBITDA. Strategic buyers pay premiums for synergies. Multiples drive offering prices and deal structuring.
Why do EBITDA multiples vary?
Growth rate (higher growth = higher multiple), capital intensity (asset-light = higher), business risk (stable cash flows = higher), margin profile (strong margins = higher), competitive moat, and market sentiment. CrowdStrike at 100x vs small biz at 5x reflects these factors.
Real-World EV/EBITDA Examples
The calculator examples reflect actual market multiples. Apple at 23.7x commands a premium for brand, ecosystem, and cash generation. Walmart at 11.7x reflects stable retail with predictable cash flows. General Electric at 15.4x sits in the industrial range. Pfizer at 9.0x shows pharma often trades at a discount due to patent cliffs and R&D risk. CrowdStrike at 100x exemplifies hypergrowth SaaS—revenue growth drives the multiple. A small business acquisition at 5.0x is typical for main street (plumbers, HVAC, accounting firms) where PE and strategic buyers target 4–6x.
EBITDA Multiples in M&A
Every M&A deal uses EV/EBITDA. Strategic buyers pay premium multiples for synergies. PE firms target 5–8x for add-ons and platform deals. When KKR bought Twitter for $44B at 30x+ EBITDA, Elon Musk called it a deal—the multiple reflected growth and strategic value. Main street businesses (plumbers, HVAC, accounting firms) typically sell for 4–6x. The spread reflects growth, risk, capital intensity, and competitive moat.
Strategic M&A
Corporate buyers often pay 15–25% premium over standalone value for synergies. Revenue synergies, cost cuts, and market expansion justify higher multiples.
Private Equity
PE targets 20–25% IRR. At 5x EBITDA with 3x leverage, they need operational improvement and multiple expansion to hit returns. Add-on acquisitions often at 4–6x.
Official Sources
Disclaimer
EBITDA multiples vary by industry and market conditions. Not financial advice. Consult professionals for M&A or investment decisions.