MULTIPLIERS
Multipliers generally reflect how many years of cashflow your business is worth. Under most circumstances it is the same thing as the P/E ratio of your company. For industries that have higher barriers to entry, multipliers will generally be higher. For larger companies, multipliers are also higher because it has usually taken longer to get where they are. Multipliers can also be an indication of industry demand or just the desirability of the company. The use of multipliers is a common technique, but choosing multipliers is more of an art instead of a science.

Your choice of multipliers for this valuation should be a realistic number based on your best guess and not what you would like to see. Ultimately, it only matters what multiplier your buyer uses to value your company.

Below are a list of ranges of multipliers for different variables. Please choose the one that you think best fits your company in order to obtain as accurate of a valuation as possible.
    In US$ (in 000's) 
GROUP/ Type of Business # of Companies in Sample Multiplier of EBITDA Median Annual Revenue  Median Sale Price  Low Sales Price  High Sales Price 
Agriculture, Forestry and Fishing 57 3.17 435 235 19 16,000
  Animal Specialty Services 8 1.34 143 95 25 470
  Landscape Counseling and Planning 13 3.97 723 315 19 1,058
  Lawn and Garden Services 27 3.22 328 165 20 52,750
Construction 180 4.48 1,406 560 18 209,482
  Carpentry Work 14 3.85 1,022 360 125 1,170
  Concrete Work 10 6.35 1,977 570 81 209,482
  Electrical Work 14 5.31 1,100 718 110 11,500
  Plumbing, Heating and Air Conditioning 32 3.55                1,064 446 18 3,800
  Roofing, Siding and sheet metal work 7 11.61 1,429 430 50 7,263
  Single-Family Housing Construction 21 4.44
  Special Trade Contractors 28 4.23
  Water, Sewer, and Utility Lines 9 11.21 13,976 12,400 260 111,173
Finance, Insurance and Real Estate 114 6.84 5,074 18,400 20 3,616,353
  Fire, Marine, and Casualty Insurance 5 1.8 52,005 39,625 5,748 400,000
  Insurance Agents, Brokers, and Service 13 6.84 719 775 20 196,305
  Investment Advice 7 6.99 2,876 25,274 3,000 273,828
  Mortgage Bankers and Loan Correspondents 7 3.64 2,007 2,048 57 15,745
  Patent Owners and Lessors 6 12.86 8,720 35,530 5,279 210,134
  Real Estate Agents and Managers 12 2.11 823 288 35 18,600
  Security Brokers and Dealers 7 5.96 46,583 31,000 900 934,500
Manufacturing 782 7.65 4,443 5,873 20 16,600,000
  Commercial Printing 36 5.4 490 255 50 1,700,000
  Commercial Printing, Lithography 25 5.65 647 372 20 50,311
  Computer Peripheral Equipment, Not Elsewhere Classified 12 18.18 7,361 7,662 202 111,000
  Computer Storage Devices 7 7.34 11,593 58,517 1,752 302,612
  Electrical Equipment and Supplies, Not Elsewhere Classified 7 23.82 2,002 2,400 150 62,400
  Electromedical Equipment 7 13.5 7,921 17,300 1,208 740,000
  Electronic Connectors 12 3.76 6,717 5,500 169 260,000
  Fabricated Metal Products, Not Elsewhere Classified 14 5.26 2,407 1,362 80 105,500
  Fabricated Structural Metal 11 3.85 4,874 2,340 600 11,000
  In Vitro and In Vivo Diagnostic Substances 6 2.64 15,300 33,450 3,390 84,800
  Industrial Machinery 20 4.53 1,183 859 50 349,500
  Instruments to Measure Electricity 5 8.48 25,435 25,768 1,628 229,573
  Laboratory Analytical Instruments 8 8.47 2,510 8,825 350 325,000
  Manufacturing Industries 21 6.96
  Men's and Boy's Clothing, Not Elsewhere Classified 6 12.02 19,696 32,417 625 79,075
  Millwork 7 6.26 3,015 1,642 1,500 12,135
  Miscellaneous Publishing 11 10.08 10,713 20,469 175 106,000
  Motor Vehicle Parts and Accessories 8 6.55 55,858 79,084 225 143,900
  Optical Instruments and Lenses 8 5.4 27,064 29,741 1,033 55,236
  Orthopedic, Prosthetic, and Surgical Appliances and Supplies 9 13.38 8,944 16,914 570 291,592
  Paper Mills 5 3.56 85,480 67,900 2,450 218,000
  Periodicals 9 16.8 1,579 3,740 40 350,000
  Pharmaceutical Preparations 37 15.52 10,110 22,862 199 16,600,000
  Plastics Materials and Resins 5 6.76 89,000 60,000 190 227,700
  Plastics Products 21 9.04 5,563 5,000 240 1,200,000
  Printed Circuit Boards 10 7.63 8,942 16,750 1,450 226,600
  Process Control Instruments 6 12.69 6,014 18,550 450 813,100
  Radio and Television Communications Equipment 10 19.57 10,852 37,065 20 100,190
  Semiconductors and Related Devices 26 85.12 6,795 42,402 3,251 600,000
  Signs and Advertising Specialties 24 5.2 687 375 47 191,827
  Special Industry Machinery, Not Elsewhere Classified 6 6.45 8,889 10,095 4,053 339,272
  Sporting and Athletic Goods, Not Elsewhere Classified 7 42.95 10,242 5,250 72 549,364
  Surgical and Medical Instruments 17 9.9 9,614 33,866 3,075 525,000
  Telephone and Telegraph Apparatus 11 19.85 15,618 9,000 1,250 146,649
  Wood Kitchen Cabinets 14 4.64 1,087 405 85 76,748
Mining 27 7.2 14,279 23,000 405 2,660,220
  Drilling Oil and Gas Wells 5 9.84 10,674 28,000 4,853 2,660,220
  Oil and Gas Field Services, Not Elsewhere Classified 11 7.32 13,278 23,125 405 207,000
Retail Trade 910 4.15 451 175 8 3,448,300
  Boat Dealers 8 4.07 3,449 540 80 47,092
  Computer and Software Stores 22 13.49 822 196 20 15,000
  Drinking Places 34 4.3 491 237 44 10,633
  Drug Stores and Proprietary Stores 15 5.72 5,588 2,850 24 3,448,300
  Eating and Drinking Places 348 3.66 340 140 10 182,000
  Floor Covering Stores 13 1.82 1,400 300 95 2,343
  Florists 22 1.78 308 106 42 800
  Furniture Stores 13 4.46 862 290 80 13,960
  Gasoline Service Stations 21 3.21 1,800 300 41 4,210
  Gift, Novelty, and Souvenir Shops 19 3.55 326 156 30 101,500
  Grocery Stores 49 4.42 823 235 19 1,600
  Hardware Stores 9 5.42 766 360 45 810
  Hobby, Toy, and Game Shops 8 2.64 823 436 75 7,200
  Liquor Stores 25 8.65 743 305 47 1,512
  Merchandising Machine Operators 15 4.1 133 90 25 511
  Miscellaneous Food Stores 14 6.44 519 370 50 150,000
  Miscellaneous Home furnishings 24 3.59 538 205 70 2,100
  Retail Bakeries 16 5.93 273 86 35 12,200
  Retail Nurseries and Garden Stores 13 5.01 438 213 65 1,200
  Sporting Goods and Bicycle Shops 16 3.88 310 105 33 30,000
  Used Merchandise Stores 12 3.77 271 135 10 120,000
  Women's Clothing Stores 16 3.81 638 320 65 258,000
Services 1372 6.7 846 606 5 3,055,000
  Accounting, Auditing and Bookkeeping 21 7.31 448 480 35 73,000
  Advertising Agencies 8 9.14 5,014 5,475 110 39,850
  Advertising, Not Elsewhere Classified 10 4.28 241 259 33 28,484
  Amusement and Recreation, Not Elsewhere Classified 15 4.6 586 295 20 354,399
  Automotive Services 25 4.79 562 340 100 3,144
  Beauty Shops 62 3.08 285 110 18 1,650
  Building Maintenance Services 27 2.25 299 150 25 1,315
  Business Consulting Services, Not Elsewhere Classified 19 10.84 13,580 14,941 135 272
  Business Services, Not Elsewhere Classified 116 5.43 388 258 21 184,994
  Carwashes 15 7.34 252 315 90 2,121
  Child Day Care Services 32 3.83 323 143 10 3,100
  Coin-operated Laundries and Cleaning 20 3.71 127 143 55 107,507
  Commercial Art and Graphic Design 7 12.74 2,400 470 60 70,000
  Commercial Nonphysical Research 9 12.56 2,900 3,700 100 153,997
  Commercial Physical Research 7 13.55 10,629 38,934 10,904 245,000
  Computer Integrated Systems Design 38 15.63 9,434 10,876 37 415,000
  Computer Related Services 19 13.15 9,818 12,480 55 160,000
  Custom Computer Programming Services 30 9.78 4,323 14,500 165 168,000
  Data Processing and Preparation 8 13.82 4,171 17,587 58 87,589
  Detective and Armored Car Services 10 5.42 1,693 1,103 75 78,856
  Direct Mail Advertising Services 14 5.55 524 363 92 41,000
  Disinfecting and Pest Control Services 8 9.95 3,622 4,022 55 98,830
  Dry-cleaning Plants, Except Rugs 24 5.78 295 250 36 5,068
  Employment Agencies 15 8.48 1,190 405 85 32,761
  Engineering Services 9 8.12 2,550 2,273 600 221,400
  Equipment Rental and Leasing 13 5.07 534 589 113 1,815
  General Automotive Repair Shops 48 4.94 643 243 30 1,500
  Help Supply Services 20 4.94 3,513 2,464 120 41,141
  Home Health Care Services 11 3.55 2,186 1,070 300 19,100
  Information Retrieval Services 24 7.38 1,574 1,475 50 155,000
  Management Consulting Services 46 10.37 7,935 10,841 38 204,418
  Medical Laboratories 9 4.52 12,212 12,500 140 1,939,800
  Miscellaneous Personal Services 39 2.64 250 113 15 8,700
  Offices and Clinics of Dentists 84 33.73 1,338 770 41 6,300
  Offices and Clinics of Medical Doctors 12 7.83 2,936 2,375 120 345,000
  Physical Fitness Facilities 38 3.24 195 122 17 12,897
  Prepackaged Software 180 15.87 4,684 11,978 54 588,979
  Repair Services, Not Elsewhere Classified 21 4.37 583 425 70 68,000
  Schools and Educational Services, Not Elsewhere Classified 15 3.45 331 322 60 361,000
  Security Systems Services 14 5.83 2,809 3,647 295 65,500
  Skilled Nursing Care Facilities 5 13.66 10,122 11,315 185 101,500
  Testing Laboratories 8 3.44 2,487 1,520 63 14,700
  Top and Body Repair and Paint Shops 28 5.08 550 210 83 2,350
Transportation, Communications, Electric, Gas and Sanitary Services 184 6.16 3,534 2,139 5 14,435,000
  Airports, Flying Fields, and Services 7 10.73 5,378 2,691 706 76,349
  Cable and Other Pay Television Services 9 9.66 5,039 7,220 1,700 14,435,000
  Communications Services 11 9.9 14,379 18,433 2,882 416,723
  Courier Services, Except by Air 9 2.52
  Local Trucking With Storage 8 4.86 2,389 1,050 370 3,000
  Radio & Telephone Communication 12 4.44 11,954 1,360 20 95,000
  Refuse Systems 8 6.15 2,138 940 100 2,190,558
  Telephone Communications, Except Radio 34 7.57 6,482 3,534 100 2,578,432
  Travel Agencies 9 10.68 4,838 1,750 230 32,666
  Trucking, Except Local 13 4.94 2,558 1,800 325 80,793
Wholesale Trade 212 5.79 1,316 545
  Electrical Apparatus and Equipment 10 7.7 3,445 3,980
  Electronic Parts and Equipment 8 9.05 1,462 1,248
  Groceries and Related Products 8 2.24 1,244 508
  Hardware 8 20.12 1,717 844
  Industrial Supplies 9 8.41 5,000 2,700
  Medical and Hospital Equipment 13 5.95 1,820 617
  Motor Vehicle Supplies and New Parts 8 4.75 871 2,163
  Nondurable Goods 10 7.62 1,305 463
  Petroleum Products 8 12.04 3,547 1,151
Source: Inc Magazine