The FNDRS Playbook · PB09 · Positioning
The size premium staircase
Bigger businesses get higher multiples. Not because of size, but because of what size proves.
The idea
Bigger businesses get higher multiples. Not because of size, but because of what size proves.
Buyers pay more per dollar of earnings for larger companies. Part of that is financing: larger deals attract more lenders and more buyers. Part is risk: a $10M EBITDA business has usually already solved the problems a $2M business has not.
That is why a merger or add-on before a sale can move a founder up more than one step at once.
Timing
The time to start the conversation is now
How far out you feel is not the signal. Buyers read the trailing numbers, so time before a sale is room to move them, not a waiting room. A founder with a number in mind may reach it in one sale or in two: a majority stake now, with equity rolled into the buyer’s company for a second sale later. The sale itself, once you sign, runs in four phases.
Read the exit timing windowFour phases, for a company that is ready. The conversation can start any time before.
The figure
Four steps up
| Adjusted EBITDA | Typical EBITDA multiple |
|---|---|
| $1M to $2M | 5.0x |
| $2M to $5M | 6.0x |
| $5M to $10M | 7.0x |
| $10M and up | 8.5x |
A combination that takes two $3M businesses to $6M can move both up a step.
How to read it
Four bars showing that larger businesses, measured by earnings, tend to sell at higher multiples. The step between bands is the reason a founder might combine with another business before selling.
You sell once. They buy for a living.
Every sale of a founder-led business is a negotiation between a first-timer and a professional. Each chapter of the playbook closes part of that gap.
Read the asymmetryWhich category. Where in the range.
More in Positioning
See where your business sits
The Go-To-Market Analysis (GTMA) places your business on these frameworks with your own numbers, before a buyer does.