What Is a Good EBITDA Multiple for an Australian SME?

Every week someone asks me, "What's a good multiple for my business?" and I ask them what industry they're in, what their EBITDA is, and who they think would buy it. Nine times out of ten, they've already got a number in their head—usually something optimistic they heard at a networking event or read in an online forum.

The problem is that EBITDA multiples don't work like that. There is no "good" multiple. There's the multiple your business attracts, based on what it does, how big it is, how it makes money, and who's buying. The range is enormous, and most of the factors that push it up or down are either invisible to owners or misunderstood.

This article breaks down what Australian SMEs actually sell for, industry by industry, size by size, and why the gap between the best and worst multiples in the same sector can be 3× or more.

Industry multiples: the baseline reality

Different industries attract different multiples because buyers are pricing different levels of risk, growth potential, scalability, and capital intensity. A SaaS business with 90% gross margins and recurring revenue will always command a higher multiple than a retail shop with 25% margins and foot traffic risk.

Here's what we see in the Australian small business M&A market for established, profitable SMEs with clean financials and reasonable scale:

Industry	Typical EBITDA Multiple Range	What drives the range
Professional Services (accounting, legal, consulting, engineering)	3–5×	Staff retention, client stickiness, degree of specialisation. Firms with long-term contracts and minimal key-person risk hit the top of the range.
Trade Services (plumbing, electrical, HVAC, building)	2–4×	Owner dependency, workforce stability, contract vs. one-off work. Businesses with maintenance contracts and licenced teams command premiums.
SaaS & Tech (B2B software, platforms, tech-enabled services)	5–7×	Recurring revenue, churn rate, product-market fit, scalability. Higher multiples if net revenue retention >100% and CAC payback <12 months.
Retail & Hospitality (cafés, restaurants, specialty retail)	2–3×	Location risk, lease terms, foot traffic volatility. Franchises and businesses with owned premises can push higher.
Healthcare (dental, physio, allied health, aged care)	4–6×	Practitioner dependency, regulatory compliance, patient retention. Group practices with employed clinicians and strong systems get top multiples.
Manufacturing & Distribution (light manufacturing, wholesale, logistics)	3–4×	Customer concentration, margin stability, capital requirements. Businesses with long-term supply agreements and proprietary products do better.

Size absolutely matters

Bigger businesses command higher multiples. This isn't subjective—it's structural. Larger businesses are less risky, more financeable, more attractive to strategic and financial buyers, and they have more negotiating leverage. The multiple premium for scale is real and significant.

Here's what we observe in practice for Australian SMEs, holding quality roughly constant:

EBITDA Range	Typical Multiple	Buyer Type
< $500K	2–3×	Primarily individual buyers; harder to finance, limited buyer competition, often viewed as "buying a job".
$500K – $1M	3–4×	Mix of individuals and small strategic buyers. More financeable, broader buyer pool, starts attracting search funds.
$1M – $2M	4–5×	Strategic buyers, small PE, aggregators. Sufficient scale to support professional management, documented systems expected.
> $2M	5–7×+	Institutional buyers, private equity platforms, trade acquirers. Premium for market position, brand, and strategic value.

The logic is straightforward. A buyer paying $1.5M for a business generating $500K EBITDA (3× multiple) is making a risky bet that depends heavily on them running it well. A buyer paying $6M for a business generating $1.5M EBITDA (4× multiple) is buying something that can support a full management team, has demonstrated resilience, and is large enough to absorb shocks.

Scale also determines who can buy you. Businesses below $500K EBITDA are mostly sold to individuals constrained by personal finances and bank appetite. Businesses above $1M EBITDA attract strategic and financial buyers who compete on commercial terms, not personal cash flow.

Quality of earnings: where the premium lives

Industry and size give you a baseline. Quality of earnings determines whether you're at the bottom of that range or the top. This is where most of the value creation (or destruction) happens in the year or two before sale. Learn more about what constitutes a strong EBITDA performance.

Buyers pay for predictability, and they discount for risk. The quality factors that most materially affect your multiple:

Recurring revenue

A professional services business that re-tenders every engagement is worth materially less than one with 70% of revenue locked into annual retainers. A trade services business doing one-off residential jobs is worth less than one with commercial maintenance contracts spanning three years.

Recurring revenue is more predictable, more financeable, and easier to value. In practice, businesses with >60% recurring revenue can command a 0.5–1.5× premium over comparable businesses with transactional revenue models.

Owner dependency

If the business stops working when you're on holiday, it's not a business—it's a job with a business structure around it. Buyers price this in ruthlessly because the single biggest risk in any SME acquisition is that the key relationships, knowledge, or effort walk out the door at settlement.

Reducing owner dependency is one of the highest-ROI activities you can do pre-sale. Hire a manager, document your processes, delegate key client relationships. A business that demonstrably runs without the owner can command a 20–30% valuation premium over one that doesn't.

Customer concentration

If your top three customers represent 60%+ of revenue, you don't have a diversified business—you have a large exposure. Buyers will model the loss of your biggest customer into their downside scenario and price accordingly.

The threshold that matters: no single customer >15% of revenue, top five customers <40% of revenue. Businesses that meet this standard are materially easier to finance and less risky to own, and the multiple reflects it.

Growth trajectory

A business with three consecutive years of 10–15% revenue growth, supported by documented market expansion or product development, will command a materially higher multiple than a business with flat or declining revenue, even if current EBITDA is identical.

Buyers don't just pay for what the business earns today. They pay for what they believe it will earn tomorrow. Demonstrable, sustainable growth is one of the few things that reliably pushes your multiple above the industry median.

Buyer type changes everything

The same business is worth different amounts to different buyers. A plumbing business doing $600K EBITDA might be worth 2.5× to an individual buying a job, 3.5× to a regional competitor who can consolidate overhead, and 4× to a national roll-up platform that values it as a bolt-on acquisition.

Understanding who your natural buyer is—and optimising your business to appeal to the highest-value buyer type—can add hundreds of thousands of dollars to the exit price.

Individual buyers (owner-operators)

These are people buying a business to run as their primary income source. They're typically constrained by personal cash, bank lending limits (usually 50–70% LVR), and limited M&A experience. They pay the lowest multiples but they're often the most motivated and the easiest to deal with if you're selling a smaller business.

Typical multiple: 2–3.5× depending on industry and risk.

Strategic buyers (trade or adjacent businesses)

Competitors, suppliers, or complementary businesses who see commercial synergies in acquiring you. They might eliminate duplicate overhead, cross-sell to your customers, or acquire capabilities they can't build internally. Because synergies increase the effective EBITDA they're buying, they can rationally pay more.

Strategic buyers often pay the highest headline multiples but their due diligence is deep and their negotiating position is strong—they know your business as well as you do, sometimes better.

Typical multiple: 3.5–5×+ depending on strategic value.

Financial buyers (private equity, search funds, aggregators)

These are professional investors buying businesses as assets, not jobs. They use leverage, they move quickly, and they pay competitive prices. The trade-off is deal complexity: earnouts, rollover equity, management retention clauses, and performance hurdles are standard.

Private equity buyers typically look for businesses with $1M+ EBITDA, strong management teams, and a credible growth path. They'll pay a premium for platform businesses they can build around, and they're increasingly active in the Australian SME market.

Typical multiple: 4–6×, but with significant commercial terms attached.

Putting it all together: a worked example

Let's say you own a commercial plumbing and HVAC business. $800K EBITDA, 60% of revenue from maintenance contracts, a full-time general manager who's been with you for five years, and your top five customers account for 35% of revenue. Three years of 8% revenue growth, clean financials, strong margins.

Here's what different buyers might offer:

Buyer Type	Multiple	Valuation	Why
Individual buyer (owner-operator)	2.5×	$2.0M	At the bottom of the range due to financing constraints and perceived risk of running a technical business.
Regional trade competitor	3.8×	$3.04M	Premium for recurring contracts, low owner dependency, and ability to consolidate overheads and cross-sell.
National roll-up / PE platform	4.2×	$3.36M	Values it as a bolt-on with existing management, recurring revenue base, and opportunity for margin improvement through centralised procurement.

Same business, same EBITDA, same year. The difference between the lowest and highest offer is $1.36M—a 68% premium. The driver isn't luck or negotiation skill. It's knowing who values your business most and ensuring they're at the table.

What owners get wrong about multiples

After working with dozens of business owners through exits, the mistakes I see most often:

1. Anchoring to irrelevant comparables. "My mate sold his business for 5× EBITDA" is not useful information unless his business was in the same industry, same size, same structure, same quality, sold to the same buyer type, in the same year. Most of the multiples owners cite as benchmarks are either not comparable or not accurate.

2. Confusing gross profit with EBITDA. A business with $2M gross profit and $1.2M in operating costs has $800K EBITDA, not $2M. Buyers value EBITDA. If you're quoting revenue or gross profit multiples, you're using the wrong denominator.

3. Ignoring deal structure. A headline valuation of "5× EBITDA" means nothing if 40% is deferred into an earnout you have to hit aggressive targets to collect, and another 20% is rolled into equity in the acquiring company. Earnouts rarely pay in full. The multiple that matters is what you get in cash at closing.

4. Believing the multiple is fixed. Your multiple isn't static. It's the output of dozens of variables, most of which you control. Reducing customer concentration, hiring a GM, switching to recurring contracts, or demonstrating growth can shift your multiple by 0.5–1× in 12–18 months. On a $1M EBITDA business, that's $500K–$1M in value creation.

So what's a good multiple?

A good multiple is the one you can actually achieve with a credible buyer who will close. It's not the highest number a broker quotes to win your listing. It's not the optimistic figure from an online valuation calculator. It's the number a sophisticated buyer offers after proper due diligence, in a competitive process, with terms you can live with.

For most Australian SMEs in 2024, that means:

• 2–3× for smaller businesses (<$500K EBITDA) or those with structural risks
• 3–4× for mid-sized businesses with decent quality of earnings and some scale
• 4–6× for larger, well-run businesses with recurring revenue, low owner dependency, and strategic value to buyers
• 5–7×+ for tech-enabled or SaaS businesses with strong unit economics and growth

If you're outside those ranges, either you've built something exceptional (genuinely possible), or the number you're working with isn't real. The only way to know for certain is to test the market properly or get an honest, third-party assessment from someone who's done it before. (For a detailed walkthrough of the full valuation process, see what is my business worth.)