Multiple
The ratio of enterprise value to adjusted EBITDA. A verdict on risk, size, and growth.
In a sale
What it changes in a sale
A multiple is not a number buyers look up. It is a judgment they reach about how large the business is, how fast it is growing, and how risky its future cash flows are, and every business in an industry sits somewhere in a range. Where a business lands in that range is decided by evidence, and much of that evidence is produced long before a sale.
Where it comes up
Read it in context
In the articles
- The 4.5x problemMost founders assume their business is worth the trade multiple. That assumption costs millions.
- Same business, two outcomesTwo identical businesses, one prepared and one not, sell for very different prices.
- An add-back is an argumentAdjusted EBITDA is built, not declared, and the buyer's accountants will rebuild it.
- The owner-dependency trapThe more the business needs you, the less a buyer pays, and the longer you stay.
- When a buyer calls firstAn inbound offer is information, not a decision.
- Diligence yourself firstEvery business has issues. The question is who finds them.
- Real estate and the operating businessOwner-held real estate is a second transaction inside the first.
- Bigger before you sell: combinations and add-onsSometimes the best pre-sale move is an acquisition of your own.
- What the buyer's memo says about youBefore any offer, someone writes an internal memo. Here is what is in it.
In The FNDRS Playbook
- PB02 The multiple rangeYour industry has a range. Where you land is decided by evidence.
- PB05 The owner dependency scaleThe more the business needs you, the less a buyer will pay for it.
- PB08 The buyer lens scorecardThis is what a buyer’s first internal memo says about you.
- PB09 The size premium staircaseBigger businesses get higher multiples. Not because of size, but because of what size proves.
- PB25 The combination matrixSometimes the best pre-sale move is an acquisition of your own.
- PB10 The adjusted EBITDA bridgeAdjusted EBITDA is built, not declared.
- PB11 The add-back defensibility matrixAn add-back is an argument. Some arguments win.
See the terms with your own numbers
The Go-To-Market Analysis (GTMA) builds the file a buyer would build on your business, before a buyer does.