In many conversations with founders, one of the first things I hear sounds something like this:
“Companies like mine are selling at 10x EBITDA.”
“A competitor sold three years ago at 12x, so my company should be worth at least that.”
Looking at comparable transactions, analysing recent deals in the same sector, or checking the multiples at which similar listed companies trade makes perfect sense. It is a reasonable way to get an initial feel for where the market is.
What should be avoided is turning that reference into an absolute truth.
Because multiples work as a rule of thumb: they help orient you, but they do not replace real analysis. Every company, at a specific moment in time and in front of a specific buyer, ends up with a price that can be very different from the market average.
Behind a “10x EBITDA” there is far more than meets the eye.
In the following sections, I explain why EBITDA is used as a reference, what market multiples actually tell us, why they vary so much by sector and geography, and—above all—why no serious buyer values a company based on a multiple alone.
EBITDA is not a perfect metric, but it is the most practical one in M&A processes.
It is widely used because it allows buyers and sellers to:
In short, EBITDA is not ideal—but it is the common language spoken by buyers, banks, funds, and advisors.
EBITDA stands for:
Earnings Before Interest, Taxes, Depreciation and Amortization
In practice, it represents the company’s result before:
The most intuitive approach:
This view helps understand EBITDA as the pure result of operating activity.
In many M&A processes, EBITDA is rebuilt starting from net profit:
In many transactions, EBITDA is adjusted to reflect the recurring earning capacity of the business. The goal is to remove items that do not represent normal operations, such as:
One-off expenses linked to specific decisions, such as a particular restructuring or the shutdown of a business line.
Exceptional items that do not reflect normal operations, such as legal fees from a closed litigation, transaction-related costs (legal or M&A advisors), one-off penalties, or non-recurring fines.
Expenses linked to the current shareholder or management structure that will disappear post-transaction, such as the remuneration of a founder leaving the company, personal expenses charged to the business (still common in many SMEs), or board structures that will not be maintained.
First: EBITDA is not cash flow
A high EBITDA does not guarantee cash generation if CapEx, working capital consumption, or debt levels are high.
Second: poorly adjusted EBITDA destroys trust
When buyers see EBITDA inflated with aggressive adjustments or questionable “normalisations,” they interpret it as a lack of seriousness and immediately increase their perception of risk.
A multiple does not measure the past.
It measures future expectations.
Buyers pay higher EBITDA multiples when they believe that EBITDA:
This is why two companies with the same EBITDA can have radically different valuations.
According to PitchBook data (global median, 2025):
Higher U.S. multiples largely reflect the scale and opportunity of the market. When a company can grow for years within a single, large, homogeneous, and deep domestic market, expected growth is higher—and that is reflected in the multiple.
The comparison becomes very clear when looking at market size:
In markets like these:
The result is higher expected growth, less friction, and greater long-term visibility—leading to higher EBITDA multiples.
Looking at global average EBITDA multiples:
The message is clear: 2021 was the exception, not the rule.
EBITDA multiples
Revenue multiples
When both multiples are combined, the implicit EBITDA margin the market is paying becomes clear.
This explains why:
A typical example:
So is it worth €15M or €9M?
The real answer is: it depends on the rest of the business.
The multiple is a reference.
The real valuation emerges from the full context.
Beyond EBITDA, buyers analyse a wide range of KPIs, including:
EBITDA summarises the business—but it does not explain it.
1. Averages are not your reality
Market averages do not reflect your specific situation.
2. Size matters
Many datasets are driven by large deals. In mid-market and small-cap transactions, multiples are usually lower.
3. Price is not valuation
The final price depends on the fit with the right buyer, at the right moment.
EBITDA multiples are a useful tool.
But they are just that: a tool.
Real valuation appears when you:
By Joshua Novick, partner at Bondo Advisors
Source: https://www.joshuanovick.com/p/multiplos-de-ebitda-en-m-and-a-que
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