Multiple

Definition

The ratio of price to earnings a business is priced at.

Why It Matters

A multiple only means something when the earnings measure and what is baked into it match, so an SDE multiple and an EBITDA multiple are different languages. And an asking multiple is an opening position, not a comp: what a business is actually worth turns on the revenue mix and risk behind the number, which is what the industry guides unpack.

In numbers: A landscaping business with $600k of SDE listed at $1.95M is asking 3.25x; whether that is fair depends on the revenue mix behind the number, which is what the industry guides unpack.