What multiple does a business sell for in Australia?
The short answer
Australian SMEs typically sell between 1.8 and 7.5 times normalised EBITDA, with most transactions falling in the 2.5 to 4.0 times range. Hospitality sits at the bottom, SaaS at the top, and within any sector the spread between the best and worst business is wider than the gap between sectors.
A multiple is derived, not looked up
The sector band is a starting point. The actual multiple is built by adjusting that band for the specific risk profile of the business: owner dependence, revenue quality, customer concentration, earnings trend, size and capital intensity. A valuation that quotes a table figure without showing the adjustments has skipped the work.
Multiples and capitalisation rates are the same thing
A 4.0 times multiple is a 25 per cent capitalisation rate — one is the inverse of the other. Australian SME practice usually quotes the multiple; formal reports frequently show both. Neither is more accurate; they are the same arithmetic expressed for different audiences.
Size moves the multiple independently of sector
Larger businesses attract higher multiples than smaller ones in the same industry, because they carry more management depth, more customer spread and less key-person risk. The step up around $1m of EBITDA is noticeable, and again above $3m where a different class of buyer becomes interested.
Beware revenue multiples
Rules of thumb expressed as a share of turnover circulate widely — particularly in hospitality, agencies and online businesses. They ignore how profitably the revenue is earned, which is the entire question. Revenue multiples are legitimate only where earnings are distorted or negative, and then only with the reason stated.
The numbers
Indicative EBITDA multiples by sector
Ranges we observe for Australian SMEs with normalised EBITDA of roughly $250,000 to $5 million.
Scroll the table sideways →
| Sector | Multiple | What decides where you land |
|---|---|---|
| Hospitality & retail | 1.8×–3.0× | Lease term remaining, wage ratio, owner behind the counter |
| Construction and trades | 2.0×–3.5× | Forward order book, WIP treatment, licences held personally |
| Transport, agribusiness, professional services | 2.5×–4.0× | Contracted revenue, fee-earner depth, fleet age |
| eCommerce, education, mining services, real estate | 2.5×–4.5× | Demand ownership, registration term, contract security |
| Manufacturing, healthcare, financial services | 3.0×–5.0× | Capacity headroom, practitioner depth, recurring books |
| IT, SaaS & digital | 4.0×–7.5× | Net revenue retention, gross margin, real recurring revenue |
Generalised ranges for orientation, not a valuation. See the industries page for the full fourteen-sector breakdown with the specific drivers in each.
Caveats
Why two businesses in one sector differ by two turns
The spread within a sector is consistently wider than the spread between sectors. These four explain most of it.
Who answered this
Prepared by the valuation team at Business Valuations Brisbane, the business valuation division of Asset Valuations Group. Every report we issue is signed by a Certified Practising Valuer of the Australian Valuers Institute. General information only — not advice on your specific circumstances.
- Owner dependence The largest single factor in every sector. A business that runs without its owner is an asset; one that does not is a job with a logo, and buyers price it that way.
- Revenue durability Contracted and recurring revenue survives the change of ownership. Project and transactional revenue has to be won again by someone the customers have never met.
- Earnings quality Three consistent, well-documented years support the top of a band. Volatile results, heavy add-backs or one exceptional year push a valuation toward the bottom.
- Capital intensity Where holding earnings steady requires continual reinvestment in plant, fleet or fit-out, part of every profit dollar is not available to the owner — and the multiple reflects it.
Reviewed by a Certified Practising Valuer
Reviewed by Jarrad Khoury, Director and Head of Valuations — Registered Valuer (QLD, Not Limited), Licensed Valuer (WA, Not Limited), CPV and CBV. Published by Business Valuations Brisbane, the business valuation division of Asset Valuations Group.
Last reviewed
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