I’ve often said that I don’t like the question “what multiples are people paying right now” because it presupposes that any company would be worth whatever the median multiple for a particular industry might be. I like to point out that the price paid for a company is not derived from looking at industry statistics but rather from a deep dive into the company’s sustainable cash flow and risk profile.
Think of it another way. Does every house on your street sell for the same price? Absolutely not. The one in pristine condition with all new everything will sell for more than the one with the broken washing machine in the side yard which, by the way, has no grass.
So, let’s play the “what’s the multiple” game. The table below reflects median purchase price multiples by sector for companies valued under $10 million. I’ve chosen that size because there are more reported transactions in this stratum.
The first column shows the data taken from the Pepperdine University 2025 Cost of Capital Report and the second column is from the DealStats database. For individual sectors, the median results are similar, although there is some variability within healthcare and professional services.
The column on the far right shows the actual purchase prices paid for transactions in which we were involved. As you can see, setting value expectations based on these data sets would not provide an accurate representation of the company’s true value. And who benefits from establishing false expectations? Certainly not the person who answered “what multiples are people paying now?”.
As we move up in transaction size the median multiples are higher, but the results are the same. Actual purchase prices rarely occur at the median for the sector or even when drilled down to a particular industry classification code.
I don’t mean to suggest that referring to databases is unwise in determining the value of a company. It remains one of the standard methods employed when valuing a business, but the analyst needs to understand the risks and opportunities in the subject company relative to the companies that sold before making any conclusions.
Curious how your company’s value stacks up beyond the industry averages? Drop me a line and let me know. Write me at lbell@meadenmoore.com or try the old fashioned way by calling 216-928-5360.
