EBITDA Multiples by Industry: Planning your Exit Valuation

When it comes to calculating an exit valuation, the most common and basic formula that is used is Valuation = EBITDA x Multiple (sometimes EBITDA – or profit – is substituted for revenue).

The multiple is a variable figure and will be determined by an industry benchmark (which increases or decreases based on the underlying assets in your business – some of these assets are tangible; such as stock and equipment, others are intangible; such as brand, culture, systems and IP). To ensure your projections are attractive to an investor, you’ll need to ensure your profit allows for your business to be valued highly enough at the time of exit.

Knowing the exit multiple for your type of business and sector is vital. Without it, you’re unable to validate your financial projections and ensure you have a potential exit valuation that gives your investors a suitable return on their investment. Doing full valuation research to find a realistic and credible day-of-exit valuation can be challenging and time-consuming, the quickest and simplest approach is to research the EBITDA Multiple benchmark for your sector.

Thanks to Equidam, we’ve compiled a list of sector-specific multiples that you can use alongside your financial projections to determine your likely exit value. If using this method in an attempt to value your company as it stands today, you should use the final year of your projections and discount the figure accordingly.

Of course, this is just a very quick and simple method for calculating your startup valuation, we would always recommend you get a professional valuation report of your company completed before pitching to investors.

Use the table below to five the EBITDA Exit Multiple for your sector

*For these industries, a higher level business sector multiple is applied
**For these industries, a lower activity-based level is available

Source: https://www.equidam.com/ebitda-multiples-trbc-industries/