--- title: "EBITDA Multiples in the Lower Middle Market: 2025 Data" description: "Lower middle market EBITDA multiples by deal size, earnings and industry from GF Data, plus what moves a multiple up or down for your company." url: https://capstreet.multisites.ai/guides/ebitda-multiples-lower-middle-market publisher: Capstreet phone: +1-713-332-2700 contact: https://capstreet.multisites.ai/contact --- # EBITDA multiples in the lower middle market: what buyers paid and why prices differ In the first nine months of 2025, GF Data reported private equity buyers paying an average of 6.4x EBITDA for deals with enterprise value of $10 million to $25 million, and 6.8x for $25 million to $50 million. Averages hide wide gaps. Earnings quality, customers and management move your multiple. Owner guideUpdated November 10, 20267 min read ![Downtown Houston skyline, home of Capstreet](https://capstreet.multisites.ai/_astro/houston-skyline.CI1wBZKY_Z21lbxH.webp) ## Averages by deal size GF Data reported 6.4x for $10 million to $25 million deals and 8.3x for $50 million to $100 million deals in the first nine months of 2025. ## Price is EBITDA times a multiple Enterprise value equals adjusted EBITDA times the purchase multiple. Your cash proceeds come after debt and other adjustments. ## Quality moves the number Repeat customers, management depth and clean financials support a higher multiple. Concentration and owner dependence lower it. ## Compare like with like Confirm whether a quoted figure uses EBITDA or seller's discretionary earnings, and whether it is an average or an asking price. ## What is an EBITDA multiple? An EBITDA multiple is the price a buyer pays for a company divided by its adjusted EBITDA. A buyer who pays $30 million for a company with $5 million of EBITDA pays a multiple of 6. It is the most common shorthand for price in this market. CapitalPad, a private equity co-investment group, explains that a lower middle market multiple “compares a company’s enterprise value with its annual earnings before interest, taxes, depreciation, and amortization.” Acquisition benchmarks generally use adjusted EBITDA. Learn the terms in our glossary: [EBITDA](https://capstreet.multisites.ai/glossary/ebitda), [EBITDA multiple](https://capstreet.multisites.ai/glossary/ebitda-multiple), [adjusted EBITDA](https://capstreet.multisites.ai/glossary/adjusted-ebitda) and [enterprise value](https://capstreet.multisites.ai/glossary/enterprise-value). Alpine Investors, a private equity firm, gives the same rule in a 2025 article: “Company Valuation = EBITDA x EBITDA Multiple.” The multiple, it says, depends on your industry, your size, the type of customers you serve, whether those customers buy under contract or one time, and economic trends in your industry. ## What do lower middle market EBITDA multiples look like? GF Data, a deal data provider, reported average multiples between 6.4x and 8.3x for private equity deals with enterprise value between $10 million and $100 million in the first nine months of 2025. The all-deal average was 7.3x. CapitalPad published the figures in 2026. Averages rise with size, but not in a straight line. The table shows GF Data’s averages for enterprise value / trailing 12-month adjusted EBITDA, as published by CapitalPad. Enterprise value 2021 2022 2023 2024 2025 (first nine months) $10 million to $25 million 6.1x 6.4x 5.9x 6.4x 6.4x $25 million to $50 million 7.2x 7.1x 6.9x 6.8x 6.8x $50 million to $100 million 8.3x 8.5x 8.1x 8.1x 8.3x $100 million to $250 million 9.3x 9.2x 9.5x 8.5x 10.3x All reported deals 7.6x 7.6x 7.2x 7.2x 7.3x Source: GF Data, as reported by CapitalPad (2026). The full 2025 sample contained 211 deals, and tier averages are not weighted equally. CapitalPad stresses that “these are averages of different acquired businesses, not a formula that automatically reprices a company as it grows.” The fact that bigger companies sell at higher averages does not mean your company will sell at a higher multiple the day it grows. The broader GF Data series finished full-year 2025 at 7.2x, according to CIBC’s Q1 2026 review quoted by CapitalPad. In Q2 2026 the average was 7.0x. GF Data said the dip likely reflected a larger share of smaller deals. ## How do multiples change with company earnings? Multiples tend to rise with EBITDA, but the pattern is uneven. GF Data’s 2025 figures show 6.7x for companies with $3 million to $5 million of EBITDA and 8.3x above $10 million. The middle bands do not follow a smooth ladder. Capstreet states its criteria as “$3 to $15 million of EBITDA.” The bands below overlap that range. We show them to explain the market, not to state what Capstreet pays. Company EBITDA 2024 average 2025 (first nine months) $3 million to $5 million 6.5x 6.7x $5 million to $8 million 7.2x 7.4x $8 million to $10 million 6.8x 6.8x Above $10 million 7.7x 8.3x Source: GF Data, as reported by CapitalPad (2026), within a universe of $10 million to $500 million of enterprise value. CapitalPad cautions that you should “treat each band as an average of different sectors and business quality rather than a price for a given level of earnings.” The $8 million to $10 million band sat below the $5 million to $8 million band in both years. Smaller deals trade lower still. GF Data’s separate small-deal series reported 5.5x for $1 million to $5 million deals and 5.6x for $5 million to $10 million deals in the first half of 2025. Keep these apart from the larger table, because they come from a different period and sample. ## How do multiples vary by industry? Industry affects the multiple because business models, growth and cash needs differ. GF Data figures reported by CIBC for full-year 2025 show healthcare services at 8.5x, business services at 7.4x and manufacturing at 6.6x. Sector labels hide large differences. Industry 2024 2025 Healthcare services 7.7x 8.5x Retail 7.4x 7.5x Business services 7.2x 7.4x Distribution 6.9x 6.9x Media and telecom 6.7x 6.9x Manufacturing 7.0x 6.6x Technology 7.9x 6.4x Source: CIBC U.S. Middle Market Monitor, Q1 2026, reporting GF Data, as published by CapitalPad. Transaction universe of $10 million to $250 million. Technology fell from 7.9x to 6.4x, yet a recurring-revenue software company and a project-based IT firm have very different economics. CapitalPad says “industry multiples reflect the mix of business models, growth prospects, cash requirements, and acquired companies within each sector.” Compare your company with firms of similar size and model, not with a headline sector average. ## Why do published multiples disagree? Sources disagree because they measure different things. One may use asking prices, another closed deals. One may report averages, another medians. One may include add-ons. One may divide by EBITDA, another by seller’s discretionary earnings. CapitalPad puts it directly: “Published multiples differ because providers measure different companies, transactions, and earnings.” Even two reports from the same provider can differ. Use this list before you trust a number: - Is the figure a completed sale or an asking price? - Is it an average or a median? - Does the sample include add-ons or only platform deals? - Is the denominator EBITDA, adjusted EBITDA or seller’s discretionary earnings? - What period and deal size does it cover? This matters most for small owners. A business marketed on the income available to one working owner is priced on seller’s discretionary earnings, which usually adds back the owner’s pay. An investor-owned business must pay a manager, so the replacement cost belongs in the earnings. See [add-backs](https://capstreet.multisites.ai/glossary/add-backs) for how that adjustment works. ## How does the multiple turn into your cash at closing? The multiple gives enterprise value, not your cash. Debt, cash, working capital and deal structure all change what you receive. Build the full bridge with your adviser before you compare offers. CapitalPad shows the first step: enterprise value equals adjusted EBITDA times the purchase multiple. Equity value is roughly enterprise value, minus debt, plus cash. The final bridge depends on debt-like items, working capital and the purchase agreement. Here is a simple example. This one is for illustration only. Step Amount Adjusted EBITDA $5.0 million Multiple 6.5x Enterprise value $32.5 million Less debt $2.0 million Plus cash $1.0 million Equity value before other adjustments $31.5 million Then your offer may include [rollover equity](https://capstreet.multisites.ai/guides/rollover-equity), an [earnout](https://capstreet.multisites.ai/guides/earnouts), an [escrow](https://capstreet.multisites.ai/glossary/escrow) and a [working capital adjustment](https://capstreet.multisites.ai/glossary/working-capital-adjustment). Two offers at the same multiple can pay very different amounts at closing. ## What makes a multiple higher or lower? A company-specific multiple depends on the durability and growth of earnings, the cash needed to keep them and the buyer’s confidence in execution. CapitalPad groups the main drivers into five factors. Factor Supports a higher multiple Can lower it Revenue quality Repeat demand, retention, pricing power, diverse customers Dependence on one account or one owner relationship Management Clear roles and leaders who can run through a transition Positions that need replacing at high cost Cash conversion Earnings backed by collectible receivables Heavy need for inventory, equipment or growth spending Growth plan Specific opportunities with people and budgets Growth that depends on unproven demand Financial credibility Consistent records and adjustments supported by evidence Earnings that change after diligence CapitalPad adds that these are not a formula for adding fixed turns to a multiple. It also says smaller companies often trade at lower multiples because buyers must account for concentration, management depth, financing constraints and the work required to support growth. ## How do you prepare to earn a better multiple? Start 12 to 24 months before a sale. Build a team that can run without you, spread your customers and prove your earnings. A buyer pays more for earnings it can trust and expects to continue. 1. **Prove your EBITDA.** Document every add-back. CapitalPad warns that “an expense is not removable simply because a seller calls it discretionary.” A [quality of earnings](https://capstreet.multisites.ai/guides/quality-of-earnings) review can test your numbers. 2. **Reduce concentration.** Find out how much revenue your top customers make up and plan to spread it. 3. **Build management depth.** Name leaders who can run sales, operations and finance if you step back. 4. **Show recurring revenue.** Track retention, renewals and contract terms. 5. **Fix cash conversion.** Collect receivables faster and plan capital spending. 6. **Write the growth plan.** Name the opportunities, budget and owners. Our [preparation guide](https://capstreet.multisites.ai/guides/how-to-prepare-your-company-for-a-private-equity-sale) covers each step. For how buyers think about price, read [how private equity values a business](https://capstreet.multisites.ai/guides/how-private-equity-values-a-business), and for market background see [lower middle market private equity](https://capstreet.multisites.ai/lower-middle-market-private-equity) and the glossary entry [lower middle market](https://capstreet.multisites.ai/glossary/lower-middle-market). ## Next step To see whether your company fits, review our [deal criteria](https://capstreet.multisites.ai/deal-criteria) or learn about the [sale process](https://capstreet.multisites.ai/sell-your-business-to-private-equity). When you are ready, start a confidential conversation at [/contact](https://capstreet.multisites.ai/contact), call 713-332-2700 or email [connect@capstreet.com](mailto:connect@capstreet.com). ## Frequently asked questions ### What is a typical EBITDA multiple for a lower middle market company? GF Data, as reported by CapitalPad, shows averages from 6.4x to 8.3x EBITDA across deals with enterprise value of $10 million to $100 million in the first nine months of 2025. The broader GF Data series averaged 7.2x for full-year 2025. Your company can sit above or below these averages. ### How do I calculate my company's value from EBITDA? Multiply adjusted EBITDA by a purchase multiple to estimate enterprise value. For example, $5 million of adjusted EBITDA at 6.5x implies $32.5 million. Your cash proceeds then depend on debt, cash, working capital and the deal terms. Ask your adviser to build the full bridge. ### Why do smaller companies sell for lower multiples? CapitalPad says smaller companies often trade at lower multiples because buyers must account for concentration, management depth, financing constraints and the work required to support growth. Fewer buyers may also fit the deal size. A lower price can leave room for the buyer to improve the business. ### Does my industry change my multiple? Yes. GF Data figures reported by CIBC for full-year 2025 show healthcare services at 8.5x, business services at 7.4x and manufacturing at 6.6x. These sector averages mix very different businesses, so compare your company with firms of similar size and model. ### What is the difference between EBITDA and seller's discretionary earnings? Seller's discretionary earnings, or SDE, usually adds back an owner's pay and benefits. EBITDA for an investor-owned business must include the cost of replacing the owner's work. Buyers price the two differently, so check which one a quoted multiple uses before you compare. ### Can I raise my multiple before I sell? Often you can improve the factors behind it. CapitalPad names revenue quality, management, cash conversion, growth plan and financial credibility. Reduce customer concentration, build a team that can run without you and support your add-backs with records. Start 12 to 24 months before a sale if you can. ## Terms on this page - [Working Capital Adjustment](https://capstreet.multisites.ai/glossary/working-capital-adjustment) - [Lower Middle Market](https://capstreet.multisites.ai/glossary/lower-middle-market) - [Quality of Earnings](https://capstreet.multisites.ai/glossary/quality-of-earnings) - [Enterprise Value](https://capstreet.multisites.ai/glossary/enterprise-value) - [Adjusted EBITDA](https://capstreet.multisites.ai/glossary/adjusted-ebitda) - [EBITDA Multiple](https://capstreet.multisites.ai/glossary/ebitda-multiple) - [Rollover Equity](https://capstreet.multisites.ai/glossary/rollover-equity) - [Private Equity](https://capstreet.multisites.ai/glossary/private-equity) - [Add-Backs](https://capstreet.multisites.ai/glossary/add-backs) - [Earnout](https://capstreet.multisites.ai/glossary/earnout) ## Sources 1. [CapitalPad: Lower Middle Market EBITDA Multiples, Data by Deal Size and Industry](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 2. [CapitalPad: Lower Middle Market EBITDA Multiples (averages)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 3. [CapitalPad: Lower Middle Market EBITDA Multiples (earnings bands)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 4. [CapitalPad: Lower Middle Market EBITDA Multiples (small deals)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 5. [CapitalPad: Lower Middle Market EBITDA Multiples (industry)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 6. [CapitalPad: Lower Middle Market EBITDA Multiples (full year)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 7. [CapitalPad: Lower Middle Market EBITDA Multiples (Q2 2026)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 8. [CapitalPad: Lower Middle Market EBITDA Multiples (why they differ)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 9. [CapitalPad: Lower Middle Market EBITDA Multiples (smaller companies)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 10. [CapitalPad: Lower Middle Market EBITDA Multiples (formula)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 11. [CapitalPad: Lower Middle Market EBITDA Multiples (add-backs)](https://capitalpad.com/lower-middle-market-ebitda-multiples/) 12. [Alpine Investors: What to Know Before Selling your Business to Private Equity](https://alpineinvestors.com/resource/selling-your-business/) Written by Capstreet and checked against the sources above on November 10, 2026. Market figures and deal practice change, and nothing here is legal, tax or investment advice. Ask your own advisers before you act. ## Keep reading - [Lower middle market private equity: what owners should knowLower middle market private equity means investing in smaller private companies, often founder-owned, with a few million dollars in earnings. Firms buy a stake, add management and capital, and grow the business. Definitions of the market vary by firm. Capstreet looks for companies with $3 to $15 million of EBITDA.](https://capstreet.multisites.ai/lower-middle-market-private-equity) - [How private equity values a businessPrivate equity firms usually value a business as a multiple of adjusted EBITDA. They start with your profit, remove one-time and owner-related costs, then apply a multiple based on your size, industry, customers and growth. The multiple moves most with revenue quality, owner dependence and management depth.](https://capstreet.multisites.ai/guides/how-private-equity-values-a-business) - [Capstreet deal criteria: the companies we look forCapstreet looks for entrepreneur-owned business services companies with $3 to $15 million of EBITDA. We make primarily majority investments, and entrepreneurs reinvest alongside Capstreet. We want a tenured team, solid financials, a defensive business model, untapped growth potential and a niche advantage. We invest across 12 industries.](https://capstreet.multisites.ai/deal-criteria) - [How to sell your business to private equitySelling to private equity means a firm buys most of your company, usually with a mix of cash at close and equity you keep. You work through an intro call, a data request, a letter of intent, diligence and a close. Most owners stay on and invest alongside the buyer.](https://capstreet.multisites.ai/sell-your-business-to-private-equity) - [How to prepare your company for a private equity sale: a 12 to 24 month planStart 12 to 24 months before you plan to sell. Clean up your financials, support every add-back, build a team that can run without you, spread your customer base and organize your records. Buyers pay more for earnings they can verify and a business that does not depend on one person.](https://capstreet.multisites.ai/guides/how-to-prepare-your-company-for-a-private-equity-sale) - [Buy and Build Strategy: How a Platform Company Grows Through Add-On AcquisitionsA buy and build strategy starts with one well-run platform company and adds smaller businesses to it over time. The goal is a larger, more capable company than any single piece could be. It fits fragmented industries best. Owners of smaller firms can sell to a platform and often stay on.](https://capstreet.multisites.ai/buy-and-build-strategy) ## Ready to get started? Let’s talk. Tell us about your company and what you want next. Conversations are private, and there is no obligation. [Start a conversation](https://capstreet.multisites.ai/contact) [(713) 332-2700](tel:+1-713-332-2700)[connect@capstreet.com](mailto:connect@capstreet.com) ![Capstreet team members at a Houston elementary school for Houston Reads Day](https://capstreet.multisites.ai/_astro/houston-reads-day.DxNd9bIr_tggWP.webp)