What Is a Business Valuation Multiple?
A valuation multiple is the number applied to profit to determine business value.
For example:
If a business earns $200,000 profit and the industry multiple is 3x, the valuation may be approximately $600,000.
What Influences Multiples?
● Industry
● Risk level
● Growth potential
● Location
● Operational complexity
Cleaning businesses may trade at different multiples compared to hospitality or professional services.
Why It’s Important
Understanding multiples helps sellers price realistically and buyers assess fairness.
