In the lower middle market, where enterprise values run from $1M to $50M, private companies typically trade between 3x and 8x EV/adjusted EBITDA. Software and healthcare services sit at the higher end of that range, while trades and IT services run lower. A larger EBITDA base earns a higher multiple within the same industry.
Unlike public-company multiples from financial databases, the ranges below reflect actual transaction data from sell-side M&A processes involving founder-owned businesses in the lower middle market ($1M–$50M enterprise value).
Multiples are segmented by adjusted EBITDA size, $1M–$3M, $3M–$10M, and $10M+, because deal size is the single largest determinant of valuation in private markets. A $2M EBITDA business and a $12M EBITDA business in the same industry will trade at materially different multiples.
Data is compiled from private transaction databases, PE fund reporting, industry research, and Windsor Drake proprietary deal experience. All figures represent enterprise value / adjusted EBITDA ratios. For current SaaS valuation multiples by ARR band, growth rate, and vertical, see Windsor Drake’s live benchmark.
Enterprise value / adjusted EBITDA ranges for private company transactions in the lower middle market, segmented by EBITDA size to reflect the significant pricing differential between smaller and larger companies within the same sector.
| Industry | $1M–$3M EBITDA | $3M–$10M EBITDA | $10M+ EBITDA | Key drivers |
|---|---|---|---|---|
| B2B SaaS (Recurring Revenue) | 5.0x–8.0x | 7.0x–12.0x | 10.0x–18.0x | NRR, growth rate, churn |
| B2B SaaS (Mixed Revenue) | 3.0x–5.5x | 4.5x–7.5x | 6.0x–10.0x | Recurring %, gross margin |
| Fintech / Payments | 5.0x–8.0x | 7.0x–14.0x | 10.0x–20.0x | TPV, take rate, regulatory moat |
| Cybersecurity | 5.0x–7.5x | 7.0x–12.0x | 10.0x–16.0x | ARR growth, platform depth |
| Healthcare Services | 4.0x–6.0x | 5.5x–8.5x | 7.0x–11.0x | Reimbursement, multi-site |
| Healthcare IT | 4.5x–7.0x | 6.0x–10.0x | 8.0x–14.0x | Revenue model, approvals |
| IT Services / MSP | 3.5x–5.5x | 5.0x–7.0x | 6.0x–9.0x | MRR %, client retention |
| Business Services | 3.0x–5.0x | 4.5x–7.0x | 5.5x–9.0x | Contract length, concentration |
| Professional Services | 2.5x–4.5x | 4.0x–6.0x | 5.0x–8.0x | Utilization, key-person risk |
| Marketing / Digital Agency | 3.0x–4.5x | 4.0x–6.5x | 5.5x–8.0x | Retainer %, specialization |
| Insurance Brokerage | 5.0x–7.0x | 6.5x–9.0x | 8.0x–12.0x | Book of business, renewals |
| Financial Advisory | 4.0x–6.0x | 5.5x–8.0x | 7.0x–11.0x | AUM, advisor retention |
| Manufacturing | 3.5x–5.0x | 4.5x–6.5x | 5.5x–8.0x | Automation, customer mix |
| Construction / Trades | 2.5x–4.0x | 3.5x–5.5x | 4.5x–7.0x | Backlog, contract type |
| HVAC / Mechanical | 3.0x–5.0x | 4.5x–7.0x | 6.0x–9.0x | Service vs. project mix |
| Home Services | 2.5x–4.0x | 3.5x–5.5x | 5.0x–7.0x | Route density, membership |
| Transportation / Logistics | 3.0x–4.5x | 4.0x–6.0x | 5.0x–7.5x | Asset-light %, contracts |
| E-Commerce / D2C | 3.0x–5.0x | 4.5x–7.0x | 6.0x–9.0x | Brand, LTV/CAC, channels |
| Food & Beverage | 3.5x–5.0x | 4.5x–6.5x | 5.5x–8.0x | Brand, distribution |
| Staffing / Recruiting | 2.5x–4.0x | 3.5x–5.5x | 4.5x–7.0x | Perm vs. temp, fill rate |
| Dental / Veterinary | 4.0x–6.0x | 5.5x–8.0x | 7.0x–10.0x | Multi-site, payor mix |
| Environmental Services | 3.5x–5.0x | 4.5x–7.0x | 5.5x–8.5x | Recurring, regulatory |
| Aerospace & Defense | 4.0x–6.0x | 5.5x–8.0x | 7.0x–10.0x | Backlog, clearance |
| Automotive (Aftermarket) | 3.0x–4.5x | 4.0x–6.0x | 5.0x–7.5x | Multi-location, parts |
| Education / EdTech | 3.5x–5.5x | 5.0x–7.5x | 6.0x–10.0x | Enrollment, outcomes |
Source: compiled from private transaction databases, PE fund reporting, and Windsor Drake proprietary data. Ranges represent interquartile observations for transactions closed Q1 2024 – Q1 2026. Updated quarterly.
The full report includes the Windsor Drake Valuation Range Framework, premium and discount adjustment factors, methodology notes, and sector-specific commentary.
Industry multiples provide a starting point, not an answer. Windsor Drake applies a structured three-step framework to translate raw multiples into actionable valuation ranges for each engagement.
Windsor Drake runs confidential, competitive sale processes for founder-led companies. Request a confidential, no-obligation read on where your company would price and which buyers are active.
Why two companies in the same industry with similar EBITDA can trade at materially different multiples.
| Factor | Typical impact |
|---|---|
| Recurring revenue above 80% | +1.0x to +2.5x |
| Revenue growth above 30% YoY | +0.5x to +2.0x |
| Net Revenue Retention above 110% | +0.5x to +1.5x |
| Low customer concentration | +0.5x to +1.0x |
| Proprietary technology or IP | +0.5x to +1.5x |
| Competitive auction (3+ bidders) | +0.5x to +1.5x |
| Founder-dependent operations | −1.0x to −2.0x |
| Top client above 30% of revenue | −0.5x to −1.5x |
| Declining revenue trajectory | −1.0x to −2.5x |
| Regulatory or legal risk | −0.5x to −1.5x |
| Thin management team | −0.5x to −1.0x |
| High capital expenditure needs | −0.5x to −1.0x |
Cumulative adjustments typically move the effective multiple by 1.0x to 3.0x in either direction from the base industry range.
There is no universally good EBITDA multiple. The answer depends entirely on the industry, the company size, and the specific attributes of the business being valued. A 6x multiple might be excellent for a construction company but unremarkable for a cybersecurity platform.
In the lower middle market ($1M–$50M enterprise value), the typical range across all industries is 3.0x to 8.0x. Companies at the low end tend to be smaller, founder-dependent, or in cyclical industries. Companies at the high end have strong recurring revenue, diversified customer bases, and professional management teams.
Pricing a business for sale starts with calculating adjusted EBITDA. This is not the same as GAAP EBITDA. Adjusted EBITDA normalizes for owner compensation above market rate, one-time expenses, non-recurring items, and discretionary costs that would not continue post-acquisition.
Once you have a reliable adjusted EBITDA figure, multiply it by the appropriate industry multiple from the table above, factoring in your company size tier. The result is an indicative enterprise value. To convert to equity value, subtract outstanding debt and add excess cash.
Two caveats: deal structure can materially affect actual proceeds. And multiples from a competitive auction process with multiple qualified bidders consistently exceed those from bilateral negotiations.
EBITDA multiples are the default valuation metric for profitable private companies. Buyers are acquiring cash flow, and EBITDA normalizes for differences in capital structure, tax jurisdiction, and depreciation policy.
Revenue multiples are used when the company is pre-profit, in high-growth mode, or in sectors where revenue quality is the primary value driver. High-growth SaaS companies with net revenue retention above 130% are frequently valued on ARR multiples rather than EBITDA.
Deal size is the single most important variable in determining EBITDA multiples for private companies. A company with $2M EBITDA attracts primarily search funds and smaller PE firms. A company with $8M EBITDA attracts the full spectrum of lower middle market PE firms, family offices, and strategic acquirers. More qualified buyers means more competitive tension, which translates directly to higher multiples.
Senior lenders provide more leverage for larger transactions. A $30M transaction can typically secure 3.0x-4.0x senior leverage, while a $10M transaction may only support 2.0x-2.5x. Lower leverage compresses the multiples buyers can afford.
Six attributes command the strongest premiums in today’s market: recurring revenue with strong retention, AI integration or enablement, vertical specialization, clean financial documentation, management team depth, and competitive process discipline.
Companies with above 80% recurring revenue and net revenue retention above 100% consistently trade at the top of their industry range. Sellers who engage experienced M&A advisors and run structured competitive processes consistently achieve higher multiples than bilateral negotiations. The multiple you receive is not determined by what your business is worth in theory. It is determined by how many qualified buyers compete to acquire it.
The multiples in this report are derived from private transaction databases, private equity fund reporting, industry-specific M&A research, and Windsor Drake proprietary transaction experience. Public company multiples are referenced as upper-bound benchmarks but are discounted by 20-40% to reflect the illiquidity, scale, and risk differentials inherent in private company transactions. Ranges represent interquartile observations (25th to 75th percentile) for transactions closed between Q1 2024 and Q1 2026. This report is updated quarterly.
Industry benchmarks are a starting point. Windsor Drake provides confidential, company-specific valuation guidance based on your financials, market position, and the current buyer landscape.
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