---
title: "What Is EBITDA Multiple? Private Equity Glossary"
description: "An EBITDA multiple is the purchase price divided by EBITDA. Buyers use it to compare what they pay for different companies."
url: https://capstreet.multisites.ai/glossary/ebitda-multiple
publisher: Capstreet
phone: +1-713-332-2700
contact: https://capstreet.multisites.ai/contact
---

Valuation

# EBITDA Multiple

An EBITDA multiple is the purchase price divided by EBITDA. Buyers use it to compare what they pay for different companies.

An EBITDA multiple turns earnings into a price. Divide the enterprise value by EBITDA to get the multiple. Multiply EBITDA by a chosen multiple to get a price.

For example, a company earns $5 million of EBITDA. At a multiple of 6x, the enterprise value is $30 million. At 7x, it is $35 million. The same business, with a stronger story, could draw a higher multiple.

Many factors move the multiple: company size, growth, customer mix, how much of the business depends on you, and how steady the earnings are. Higher quality earnings usually earn a higher multiple.

Owners should treat any number they hear as a starting point. Terms, structure and [adjusted EBITDA](https://capstreet.multisites.ai/glossary/adjusted-ebitda) change what the multiple really means. To see how buyers think, read [EBITDA multiples in the lower middle market](https://capstreet.multisites.ai/guides/ebitda-multiples-lower-middle-market). Related terms are [EBITDA](https://capstreet.multisites.ai/glossary/ebitda) and [enterprise value](https://capstreet.multisites.ai/glossary/enterprise-value).

[Read nextEBITDA multiples in the lower middle market: what buyers paid and why prices differ](https://capstreet.multisites.ai/guides/ebitda-multiples-lower-middle-market)

## Related terms

-   [EBITDA](https://capstreet.multisites.ai/glossary/ebitda)
-   [Enterprise Value](https://capstreet.multisites.ai/glossary/enterprise-value)
-   [Adjusted EBITDA](https://capstreet.multisites.ai/glossary/adjusted-ebitda)

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