EBITDA Multiples by Industry (2025)

Last Updated: January, 2025

Company valuation is one thing that every entrepreneur must bear in mind at every stage of a business. No significant decision can be taken without estimating the market value of a company at any given point. Factors called valuation multiples are important indicators in this process. Investors and company managements alike use these valuation multiples by industry as a guide in funding and budgeting decisions. EBITDA multiples by industries are a subset of a wider group of these financial tools known as the valuation multiples.

EBITDA Multiples for Various Industries

‘Multiple’ as such means a factor of one value to another. In the context of company valuation, valuation multiples represent one finance metric as a ratio of another. These multiples are widely categorized into three types – equity multiples, enterprise value multiples, and revenue multiples. This article focuses on EBITDA multiples valuation which is a type of enterprise value multiple.

What is EBITDA Multiple?

EBITDA stands for Earnings Before Interest Taxes Depreciation and Amortization. EBITDA multiples are a ratio of the Enterprise Value of a company to its EBITDA. These multiples are very useful to estimate the market value of a company based on a set of standard factors and simultaneously compare them to other companies in the industry with similar credentials. They are especially beneficial to compare companies within the industry but vary in aspects such as their capital structure, asset ownership, taxation, etc.

Usually in the initial stages of a business, revenue multiples are used. As the company begins to mature and profit potential becomes a determining factor for investors and market valuation, EBITDA multiples by industry are used to understand the profit potential of a company. A higher value indicates a higher profit possibility and vice versa. However, as a good practice, these multiples are not used as a single point of reference. Experienced analysts always refer to the value from two or more valuation multiples to arrive at a realistic valuation of a business.

Why is the EBITDA Multiple important?

To understand the importance of EBITDA multiples, one must begin by questioning the relevance of the two factors used in the calculation – the EV (enterprise value) and the EBITDA of the company. Enterprise value estimates the total worth of a company in the market, while EBITDA measures the profit potential of the same business. When these two are calculated as a factor of one to another, the resulting multiple provides a realistic estimate of the true merit of the company as an investment option. Investors can compare the multiples of various companies and estimate how much they really need to pay to acquire this company.

As a practice, it is seen that the lower the value of the EBITDA multiplies by industry, the cheaper is the acquisition cost of the company. Usually, any value below 10 is considered good. Thus with an EBITDA multiple, investors planning on the acquisition can estimate the following:

• Company A is trading for example at 5x
• Company B, C, D, and E are trading at 7x, 6.5x, 3x, and 9x respectively
• Company D with an EBITDA multiple of 3x seems to be the best choice for acquisition

Investors find EBITDA multiples valuation reliable while considering companies within the same industry for mergers and acquisitions. However, it is important to know that investors will always try to pitch for a lower valuation and make the necessary adjustments to the EBITDA multiple while a seller will try the opposite. An expert analyst should always keep a lookout for wrong estimations arising from these factors.

EBITDA Multiple formula 

As discussed, EBITDA multiple by industry is derived from two financial metrics – the enterprise value and the EBITDA of a company. The formula looks like this:

Let’s discuss each component one at a time.

What is EV?

EV or the Enterprise value is the first thing investors look at during mergers and acquisitions. As such, there are many factors beyond internal financial metrics that contribute to the true valuation of a company. However, funding decisions can’t be based on vague estimations. To ensure solidity in company valuations, enterprise value is used as a common reference. Though it is a theoretical value of takeover, private equity firms have evolved to rely heavily on this metric. Enterprise value indicates the amount of money needed to acquire a business.

Enterprise Value is calculated in two ways. The simplest one is:

And the elaborate version of this formula is:

Another variation of EV calculation could be:

As seen in the formula, enterprise value does not depend on the capital structure of a company. Thus, it can be safely used to compare companies with varying cap structures for a takeover. As a result, being part of the EBITDA multiple valuations, the enterprise value as an entity lends this character to the multiple as well. An EBITDA multiple is thus a reliable valuation tool while comparing companies with varying cap structures.

What is EBITDA?

Earnings Before Interest Taxes Depreciation and Amortization or EBITDA is used by investors to solely estimate a company’s profitability excluding the non-operating and non-controllable assets. This metric is easily derived from the financial reports maintained by a company. Analysts do not need to use complicated calculations to derive this value. It is simple and straightforward. EBITDA formula is as follows:

EBITDA points at the current financial health of a company. Based on this value, analysts estimate the future profit-making potential of the company. Thus, EBITDA as a part of EBITDA multiples by industry contributes as the metric that determines the profitability of companies being considered for a potential takeover.

Pros and Cons of EBITDA Multiple Valuation

EBITDA multiples valuation is a go-to technique for most investors and financial analysts dealing with high-profit mergers and acquisitions. Using this category of valuation multiple indeed has its merits; however, it is also important to note the loopholes as well. Here is a brief about the pros and cons of EBITDA multiples:

Pros of EBITDA multiples

• It can be used to evaluate various types of businesses, private as well as public. But using this multiple for public company valuations is the easiest as all financial information for such companies are readily available.
• They are best used to evaluate companies entering advanced stages of funding such as Series-B onwards. The profitability of a company is a crucial factor at this stage. The use of enterprise value as well as EBITDA together in a ratio provides investors sufficient clarity about the future profit potential of an expanding business.
• They have proven to be very useful to evaluate as well as compare companies of different sizes and capital structures. This flexibility allows a wide range of comparisons for investors to play within an industry.
• They help to evaluate companies faster in comparison to valuation multiples based on financial metrics that use cash flow and other income-generating sources.

Cons of EBITDA multiples

• They do not account for capital expenditures. Thus if a business has high capital spends, those do not feature in the multiple and might lead to skewed valuations.
• They do not consider exact cash flows as well. This again might not represent the actual financial situation of a company leading to wrong estimations.
• EBITDA multiples valuation is not regulated by any financial body. This leaves a wide berth for variations in calculations across industries. It is mostly left to the company valuation professionals and the investors involved in the takeover negotiations.
• Due to this non-regulatory aspect, it leaves open chances of misinterpretations.

EBITDA Multiples by Industry

Here is a compilation of EBITDA multiples across industries. To study this table, a couple of aspects are worth considering. Firstly, EBITDA multiples for small business or startups will be lower, in the range of 4x. Secondly, these multiples will be at a higher range for large, publicly traded companies. And lastly, since EBITDA multiples are not regulated by any federal body, fair play is expected as a good practice in business.

Sr.No	Industries	EV to EBITDA as of January 2025
1	Advertising	18.24
2	Aerospace & Defense	17.26
3	Agricultural & Farm Machinery	11.19
4	Agricultural Products & Services	9.226
5	Air Freight & Logistics	8.348
6	Airport Services	7.311
7	Alternative Carriers	10.33
8	Aluminum	7.444
9	Apparel Retail	14.28
10	Apparel, Accessories & Luxury Goods	15.38
11	Application Software	37.07
12	Asset Management & Custody Banks	16.22
13	Automobile Manufacturers	11.62
14	Automotive Parts & Equipment	5.944
15	Automotive Retail	12.52
16	Biotechnology	18.82
17	Brewers	6.607
18	Broadcasting	5.589
19	Broadline Retail	16.25
20	Building Products	13.75
21	Cable & Satellite	6.477
22	Cargo Ground Transportation	10.84
23	Casinos & Gaming	10.52
24	Coal & Consumable Fuels	7.324
25	Commercial & Residential Mortgage Finance	28.77
26	Commercial Printing	9.732
27	Commodity Chemicals	10.42
28	Communications Equipment	20.68
29	Computer & Electronics Retail	9.976
30	Construction & Engineering	14.28
31	Construction Machinery & Heavy Transportation Equipment	9.269
32	Construction Materials	11.11
33	Consumer Electronics	9.577
34	Consumer Finance	6.77
35	Consumer Staples Merchandise Retail	18.44
36	Copper	8.684
37	Data Center REITs	27.24
38	Data Processing & Outsourced Services	11.79
39	Distillers & Vintners	11.36
40	Distributors	10.85
41	Diversified Capital Markets	5.964
42	Diversified Chemicals	7.565
43	Diversified Financial Services	12.24
44	Diversified Metals & Mining	7.379
45	Diversified Real Estate Activities	13.7
46	Diversified REITs	14.23
47	Diversified Support Services	19.69
48	Drug Retail	18.7
49	Education Services	13.01
50	Electric Utilities	1.042
51	Electrical Components & Equipment	18.43
52	Electronic Components	19.09
53	Electronic Equipment & Instruments	20.68
54	Electronic Manufacturing Services	11.56
55	Environmental & Facilities Services	16.45
56	Fertilizers & Agricultural Chemicals	9.605
57	Financial Exchanges & Data	19.98
58	Food Distributors	10.49
59	Food Retail	8.126
60	Footwear	17.36
61	Forest Products	10.81
62	Gas Utilities	11.63
63	Gold	8.801
64	Health Care Distributors	14.55
65	Health Care Equipment	22.76
66	Health Care Facilities	8.472
67	Health Care REITs	20.68
68	Health Care Services	11.42
69	Health Care Supplies	19.25
70	Health Care Technology	33.02
71	Heavy Electrical Equipment	32.12
72	Highways & Railtracks	11.62
73	Home Furnishings	8.823
74	Home Improvement Retail	16.21
75	Homebuilding	8.235
76	Homefurnishing Retail	14.81
77	Hotel & Resort REITs	10.22
78	Hotels, Resorts & Cruise Lines	13.68
79	Household Appliances	11.18
80	Household Products	15.83
81	Housewares & Specialties	29.39
82	Human Resource & Employment Services	17.87
83	Independent Power Producers & Energy Traders	7.064
84	Industrial Conglomerates	10.99
85	Industrial Gases	14.39
86	Industrial Machinery & Supplies & Components	14.43
87	Industrial REITs	19.29
88	Insurance Brokers	19.48
89	Integrated Oil & Gas	-0.4184
90	Integrated Telecommunication Services	5.403
91	Interactive Home Entertainment	18.37
92	Interactive Media & Services	17.74
93	Internet Services & Infrastructure	50.51
94	Investment Banking & Brokerage	8.543
95	IT Consulting & Other Services	19.46
96	Leisure Facilities	11.21
97	Leisure Products	10.36
98	Life & Health Insurance	3.944
99	Life Sciences Tools & Services	22.04
100	Managed Health Care	16.58
101	Marine Ports & Services	8.957
102	Marine Transportation	3.924
103	Metal, Glass & Plastic Containers	10.2
104	Mortgage REITs	49.52
105	Motorcycle Manufacturers	7.433
106	Movies & Entertainment	15.2
107	Multi-Family Residential REITs	16.74
108	Multi-Sector Holdings	8.222
109	Multi-Utilities	10.07
110	Office REITs	15.09
111	Office Services & Supplies	10.52
112	Oil & Gas Drilling	5.995
113	Oil & Gas Equipment & Services	7.423
114	Oil & Gas Exploration & Production	5.237
115	Oil & Gas Refining & Marketing	7.406
116	Oil & Gas Storage & Transportation	10.84
117	Other Specialized REITs	14.9
118	Other Specialty Retail	9.744
119	Packaged Foods & Meats	10.19
120	Paper & Plastic Packaging Products & Materials	13.18
121	Paper Products	9.186
122	Passenger Airlines	7.336
123	Passenger Ground Transportation	13.24
124	Personal Care Products	15.95
125	Pharmaceuticals	14.9
126	Precious Metals & Minerals	5.38
127	Property & Casualty Insurance	89.98
128	Publishing	11.35
129	Rail Transportation	12.61
130	Real Estate Development	8.098
131	Real Estate Operating Companies	14.31
132	Real Estate Services	26.37
133	Renewable Electricity	12.02
134	Research & Consulting Services	16.84
135	Restaurants	17.4
136	Retail REITs	15.64
137	Security & Alarm Services	9.759
138	Self-Storage REITs	18.55
139	Semiconductor Materials & Equipment	21.58
140	Semiconductors	25.88
141	Silver	10.14
142	Single-Family Residential REITs	16.83
143	Soft Drinks & Non-alcoholic Beverages	13.91
144	Specialized Consumer Services	8.431
145	Specialized Finance	22.43
146	Specialty Chemicals	12.09
147	Steel	6.492
148	Systems Software	23.69
149	Technology Distributors	11.79
150	Technology Hardware, Storage & Peripherals	19.65
151	Telecom Tower REITs	17.76
152	Textiles	4.933
153	Timber REITs	22.01
154	Tires & Rubber	5.339
155	Tobacco	10.2
156	Trading Companies & Distributors	11.51
157	Transaction & Payment Processing Services	20.76
158	Water Utilities	8.246
159	Wireless Telecommunication Services	7.17

Source: https://ycharts.com/classifications/sectors for United States on January 14, 2025

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