What Multiple a $10 Million Business Sells For

A $10 million price is not a multiple. The multiple is that price divided by the earnings number a buyer will actually underwrite. Two companies can both sell near $10 million and carry different multiples, because one is still priced on seller's discretionary earnings and the other is priced on adjusted EBITDA.

The short answer: there is no single multiple for a $10 million business. An owner-operated company, where you are still the manager, often trades around 2x–3.5x Seller's Discretionary Earnings (SDE) after a real wage for that job. A company with a lead already in place can move toward 2.5x–4.5x SDE. A managed company that a bank, a sponsor, or a strategic buyer will underwrite is more often priced on adjusted EBITDA, commonly in a band around 3x–6x. The low end of that band is a founder-dependent or concentrated file. The high end is recurring revenue, a second layer of management, and earnings a quality-of-earnings review will leave standing. Those ranges are directional. They are not a quote. Industry, growth, and the buyer move them.

At this size the fight is usually the earnings definition, not a slogan you heard at a conference. About $2.5 million of adjusted EBITDA at 4x and about $2 million at 5x can both land near $10 million. So can a larger SDE file at a lower multiple. What you take home after that headline is a different page: what you actually keep when you sell a $10 million business.

At Bridge Point Business Brokers, we would rather show the bridge from reported profit to the number a buyer will multiply than hand you a multiple from a headline. Start with a confidential business valuation or M&A advisory. The valuation guide defines SDE and EBITDA side by side.

This is not a valuation, a fairness opinion, or a promise of price. Confirm the earnings bridge with your CPA before you tell a buyer, a lender, or your family a number.

The Same Price, Three Different Multiples

Work the arithmetic before you adopt someone else's multiple. These rows are illustrations. They are not a survey of closed deals.

A buyer who says "we pay 5x" has not made an offer until they name the earnings. Five times a number they will cut in diligence is a smaller company than four times a number they will leave alone. Owners lose months defending the multiple and never defending the profit it sits on.

Read the rows the other way, too. If your adjusted EBITDA is $1.5 million, a $10 million price is about 6.7x. That can be a real outcome for a contracted, recurring book with a manager who is not you. It is a hopeful outcome for a project business that still needs you to sell the work. If your SDE is $2 million and you are still the operator, 3x is $6 million, not $10 million. The gap is not an insult. It is the wage and the risk the buyer is taking on.

Revenue Is Not the Earnings Number

A company with $10 million of revenue is not, by that fact, a $10 million business. Revenue is the top line. The multiple in this range is almost never applied to revenue for an owner-operated company.

A $10 million revenue firm with thin margins, one customer, and an owner in every estimate may be a $3 million or $4 million sale, or it may not sell. A $6 million revenue firm with durable earnings, a second manager, and contracts that transfer can sell near $10 million. Buyers will ask for revenue growth. They multiply earnings.

A revenue multiple shows up in a few narrow files: a software company with very high renewal, or a strategic buyer who is really buying a customer list and will say so. If someone quotes a revenue multiple for a service company, a contractor, a distributor, or a plant, ask them to convert it to earnings. If they cannot, they do not have a price. They have a compliment.

SDE, and the Wage Inside It

Seller's discretionary earnings start from pretax profit and add back the owner's compensation, personal expenses run through the company, interest, taxes, depreciation, and amortization. That stack is the Main Street recast. It describes what one owner took out. It does not describe what a buyer will have left after they pay someone to do your job.

At a price near $10 million, many files are leaving that recast and many are not. If you still sell, estimate, manage the crew, or hold the customer relationships, the buyer prices a wage for that work. The clean way is to subtract a market salary and then apply the multiple. The messy way is to leave the salary out and apply a lower multiple to an inflated number. Both can reach a similar price. They look different in a spreadsheet, which is why two brokers can quote different multiples for the same company and mean the same dollars.

Directional, not a quote: an owner-operated company often trades around 2x–3.5x SDE after that wage. A company with a lead already running a Tuesday, a second customer, and books a lender can follow can move toward 2.5x–4.5x SDE. Below the low end are files a financed buyer will not take: one customer, earnings that appear in one year and not the three before it, or add-backs that are really the cost of operating. Above the high end, the buyer has usually stopped using SDE and started using EBITDA, because the owner's full labor is no longer in the profit.

Do not add back a salary you never paid yourself and also refuse a manager's wage. That is asking the buyer to pay you for a job and then pay someone else to do it, inside the same multiple. The normalization guide is how to build the bridge. The buyer's accountant is the test.

Adjusted EBITDA Is the Other Number

EBITDA is earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA is that figure after add-backs a buyer will accept, and after a market cost for the role you will leave if you were not already paying it.

Around a $10 million price, adjusted EBITDA is the number a bank, a sponsor, and many strategic buyers will underwrite. A standard SBA 7(a) loan stops at $5 million, so the rest of a $10 million check is equity, a conventional lender, and often a seller note. Those lenders size the loan off cash flow they believe, not off a lifestyle recast. How that check is assembled is how buyers finance a $10 million acquisition when SBA cannot cover it.

Directional, not a quote: a managed company in this range is often priced around 3x–6x adjusted EBITDA. A founder-run company with ordinary project revenue, customer concentration, or add-backs that will not survive a review sits toward 3x–4x, and sometimes the buyer refuses the EBITDA label and goes back to SDE. A company with contracted or recurring revenue, a general manager, and a customer list that is not one name can sit toward 5x–6x. Some niche files clear higher. We will not print those as a rule. If your industry story depends on a multiple you cannot tie to earnings a stranger will sign for, it is a story.

A company with roughly $3 million to $5 million of adjusted EBITDA is often the one that produces a price near or above $20 million, once a real multiple is applied. That threshold, and the process that comes with it, is what changes when a sale crosses $20 million. At $10 million you are close enough that a buyer may already talk EBITDA, and far enough that a messy SDE file still shows up.

Add-backs the multiple never sees

The multiple applies to earnings after the review, not before it. Personal vehicles, one-time legal bills, a relative on the payroll who does not work, and an owner health plan can be add-backs when they are documented and when they truly will not recur. A "one-time" discount you have run for three years is a price cut. A manager you plan to hire after closing is a cost, not an add-back. Inventory you wrote up, or a job you pulled into this year, will come out.

A quality of earnings review is where those lines get decided on a file this size. If the review cuts EBITDA by 15 percent, the multiple may stay and the price falls. Or the multiple falls because the buyer no longer trusts the rest of the file. Either way you do not get to keep the original 5x on the original number. Model the cut before you fall in love with the letter.

What Moves the Multiple

The earnings number is the denominator. These are the facts that move the numerator.

Recurring revenue and contracts

A buyer pays more for revenue that renews without you reselling it every quarter. Maintenance agreements, subscriptions, retainers with a term, and take-or-pay contracts are easier to lend against than a bid board. The test is not the word "recurring" on a slide. The test is whether the contract transfers, whether the customer has canceled, and whether the margin survives the buyer's cost structure. That file is the book a large buyer will actually pay for.

Concentration and the owner

One customer above a level the buyer fears, or one person who is the relationship, pulls the multiple down even when last year's profit was excellent. A buyer can love the company and still cut the price because the earnings might leave with you or with that account. The map is customer concentration and key-person risk. A second manager who already runs the week is worth more to the multiple than another year of the same profit with you in the middle of it.

Growth, and the year you want them to use

Buyers prefer a trailing twelve months they can tie to the tax return, sometimes a weighted average of three years when one year was a spike. A single record year, priced as if it were normal, is how sellers pick a multiple the buyer will not sign. If this year is truly the new run rate, show the customers, the backlog, and the months. Do not ask the multiple to do that work.

Growth raises the multiple when it is repeatable and when it did not consume the margin. Growth that required you, a price cut, or a customer who will not follow a new owner is not growth a buyer will multiply.

The buyer

An individual using savings and a loan is comparing the payment to your cash flow. A strategic buyer may pay more when you fill a hole they already have: a territory, a license, a plant, a customer they cannot win. A private equity firm pays for a company that can run and then be grown, and may ask you to roll equity back in. Those are different multiples because they are different uses of the same earnings. Who pays more, and what you give up, is private equity versus a strategic buyer. What a rollover does to your proceeds is the second bite.

Compare offers on the same earnings number. If one buyer is multiplying a synergy story and the other is multiplying your standalone EBITDA, you are looking at two companies. Put both on one page and label them.

What the Multiple Does Not Include

The multiple produces an enterprise value, usually on a cash-free, debt-free basis, with a normal level of working capital left in the company. Several things owners fold into "the multiple" are outside it.

Debt. The buyer's price for the company is not a price that also pays off your line of credit. Debt is settled at closing out of that price, or the equity value is the enterprise value minus the debt. A $10 million enterprise value with $1.5 million of debt is not $10 million of proceeds.

Working capital. The buyer expects a normal level of receivables, inventory, and payables. Deliver less, and the price drops. Deliver more, and you may be paid for the excess. That true-up is not a change in the multiple. It is a change in the net working capital against a peg you negotiate.

Real estate and some equipment. A building you own is often a separate price, or a lease. Putting the building inside the operating multiple mixes a real estate cap rate with a business multiple and confuses both. Asset-heavy equipment may be inside the going-concern price or scheduled beside it. Say which, in the letter, before you celebrate either number.

Your tax. The multiple is a pre-tax idea about the company. Your tax depends on basis, entity, and whether the deal is a stock sale or an asset sale. The stock versus asset guide is the structure. Your CPA is the dollar.

A seller note and an earn-out. A note and an earn-out can make the stated multiple look higher while cash at closing goes down. A 5x headline with a large note can leave you with less money this year than a 4x headline in cash. Price the note as a loan you are making, usually behind the bank. The seller-financing guide is the risk. Diligence is when a buyer tries to reopen the earnings and, with them, the multiple.

How to Read a Multiple This Week

Put five lines next to any number a buyer, a broker, or a friend gives you.

1. The earnings figure, named: SDE or adjusted EBITDA, and the year or the trailing period.
2. The add-backs, each tied to a document, and the salary if you are still in the job.
3. What is outside the multiple: debt, the building, excess cash, and the working-capital peg.
4. Cash at closing versus a note, an earn-out, or rollover. The multiple is not the wire.
5. Whether a second buyer, shown the same earnings, would sign it. One enthusiastic multiple is a conversation. Two are a market.

If you want the earnings to support a higher multiple, the work is the file, not the adjective. Clean monthly statements, a customer list that is not one name, a manager who already has the keys, and contracts a lawyer can assign. That is a twelve- to thirty-six-month project when you start from a founder-run set of books. The calendar is the sale-prep roadmap. Who should run the process at this size is a business broker versus an M&A advisor. Keep the process quiet while you do it. The confidential sale guide is how employees and customers stay off the rumor that reprices the deal for you.

Talk With Bridge Point

If you have a company you believe is worth about $10 million and you want the earnings, the multiple, and the cash at closing on one page before you grant exclusivity, Bridge Point Business Brokers can value the company and show you which buyers can fund that price. Start with a valuation, M&A advisory, or contact us. Call (352) 515-0226.