The multiple is the answer, not the question
Ask a broker what your business is worth and you will get a multiple — six times EBITDA, eight times, four times. The number sounds objective. It is not. A multiple is the output of a valuation, not the input. What sits behind it is a long set of judgements about how durable, how concentrated, how transferable, and how predictable your earnings actually are.
A serious buyer does not start with the multiple. They start with the underlying questions, and the multiple falls out at the end.
What we actually look at
Recurring versus repeated revenue. A contract that auto-renews is worth more than a customer who calls every year because they always have. Both look identical on a P&L. They are not the same asset.
Client concentration. A €15M business with one client representing 35% of revenue is worth materially less than the same business spread across forty clients. Concentration is not a deal-breaker — it is a discount.
Key-person risk. If three named people leaving would damage the business, that is priced in. If you leaving would damage it, that is priced in more.
Quality of the last three years. A flat €3M of EBITDA across three years is worth more than a €3M average that includes a €4.5M peak and a €1.8M trough. Stability compounds; volatility discounts.
Regulatory tailwind or headwind. A safety inspection firm in a tightening regulatory environment is worth more than the same firm in a deregulating one. The same revenue today implies different revenue tomorrow.
What owners systematically overvalue
- Top-line growth without margin discipline. A business growing 20% but compressing margin is often worth less than one growing 5% with stable margin.
- One-off wins. A large project that closed last year is not run-rate revenue. Buyers strip it out.
- Backlog without contracts. Pipeline is not revenue. Verbal commitments are not contracts.
- Goodwill and reputation. Real, but already reflected in your margin. It does not get added a second time.
What owners systematically undervalue
- A second-line management team that can actually run things. This is often worth a full turn of EBITDA on its own.
- Clean books and clean systems. Diligence-ready means deal-certain, and deal-certain commands a premium.
- Customer relationships that survive a handover. Documented, multi-touch, multi-contact relationships are an institutional asset. One-person relationships are not.
- Regulatory permits and accreditations. Hard to replicate, slow to acquire, often invisible on the P&L.
Why we show our work
We do not lead with a multiple. We lead with how we get there, line by line, so the number is something both sides can defend years later. Sellers who understand the build-up almost always negotiate better — not because they push for more, but because they know which levers actually move the price.
A number you cannot explain is a number you cannot defend. We would rather agree on the logic first and let the multiple follow.