What Is My Company Worth? Valuing a Business with EBIT Multiples

23 August 2026, Frankfurt am Main

“What is my company worth?” This question is at the beginning of almost every consideration of a sale, and it can be answered more quickly than many business owners expect. The most common approach in the German SME market is the multiples method: business value = adjusted EBIT × industry multiple. Yet this rule of thumb is only a starting point. What matters is which factors move your multiple from the lower to the upper end of the range—and why the price ultimately achieved in the market can be very different.

The rule of thumb: EBIT multiplied by an industry multiple

The multiples method is the most widely used valuation approach for SMEs because it is quick, market-oriented and easy to understand. An earnings figure—usually EBIT, or earnings before interest and taxes—is multiplied by a factor commonly observed in the relevant industry. The result is the enterprise value: the value of the operating business before debt and cash are taken into account.

Why EBIT must be normalised first

The biggest mistake in a quick valuation is to take EBIT directly from the financial statements without reviewing it. In owner-managed companies, reported earnings are often distorted by an unusually high or low managing director’s salary, private expenses, one-off effects or costs that are not required for operations. EBIT is therefore normalised before any valuation by adjusting for these special effects. Only sustainable, repeatable earnings provide a sound basis for the buyer’s multiple. A carefully adjusted EBIT can change the business value considerably—in either direction.

Typical EBIT multiples by industry

The multiple varies significantly by industry because buyers pay more for stable, growing and high-margin business models. The following ranges provide a broad indication for SMEs as of 2026; the specific value always depends on the individual company:

Software and SaaS: approximately 6 to 14 times EBIT. Recurring revenue and scalability drive the highest multiples.
IT services: approximately 5 to 10 times EBIT.
Healthcare and care services: approximately 5 to 10 times EBIT, supported by stable demand and consolidation pressure.
Mechanical and plant engineering: approximately 4 to 8 times EBIT.
Consumer goods and retail: approximately 4 to 7 times EBIT.
Traditional services: approximately 4 to 7 times EBIT.
Skilled trades and construction: approximately 3 to 6 times EBIT.

These figures are indicative, not guaranteed. Current multiples are published regularly by market sources and fluctuate with economic conditions and interest rates. Two companies in the same sector can sit at opposite ends of the range—and that difference can represent a substantial amount of money.

What moves your multiple from the lower to the upper end

The range within an industry is not arbitrary. Whether a company achieves four or eight times EBIT depends on specific factors that can be influenced:

Recurring revenue. Contracts, maintenance agreements and subscriptions make revenue predictable and are particularly valuable to buyers.
Independence from the owner. Can the business operate without you? The less it depends on one individual, the higher its value tends to be.

If owner dependency remains, you may support the buyer during a defined transition period. Different structures are possible, such as a consulting agreement with a gradually decreasing number of hours per week or month. This helps ensure that processes, employees and customers are transferred smoothly. We assist in structuring the right arrangement.

Customer structure. A broad and loyal customer base is highly valuable. A single major customer accounting for 40 per cent of revenue, by contrast, requires a more nuanced assessment during a company sale.

Where major customers depend heavily on your company, that mutual dependency must be communicated to the buyer in a way that supports the transaction. Buyers may even be particularly interested in access to precisely such a customer.

Consistency, growth and margin. A solid track record, stable revenue, moderate growth and healthy margins justify higher multiples.
Market position and differentiation. A strong brand, patents or leadership in a niche directly support the price.
Clear figures and structures. Transparent documentation and established processes reduce the buyer’s risk—and lower risk supports a higher price.

Why the rule of thumb is only the beginning

As useful as the multiples method is for an initial indication, it does not determine the final price. Different valuation methods establish a range; the market ultimately determines the purchase price. That price can exceed the formula when several suitable buyers are brought into genuine competition.

This is why speaking to only one interested party is rarely sufficient. A broad group of qualified buyers creates the basis for a competitive bidding process in which interested parties compete for the company. The resulting price is generally higher than what a single buyer would be prepared to pay in a bilateral negotiation.

This is precisely what a structured company sale process is designed to achieve. You can learn more about the individual approaches in our article on three business valuation methods.

Frequently asked questions

How can I estimate the value of my company?

Multiply normalised EBIT by the usual industry multiple. This gives the enterprise value. After deducting debt and adding surplus cash, you arrive at the equity value attributable to the owners. A professional business valuation is required for a reliable figure. Even then, the real market value only becomes visible in a structured sale process: the market makes the price, not a theoretical formula.

Which EBIT multiple applies to my industry?

Depending on the sector, the broad range is approximately three to fourteen times EBIT, with the highest values often seen in software and the lowest in skilled trades. Within each sector, recurring revenue, growth, margins and independence from the owner determine the specific multiple.

Is the rule of thumb reliable?

It is useful for a quick initial indication, but not as a final price. It replaces neither a professional valuation nor a competitive market process. The actual purchase price emerges when several buyers compete.

Conclusion

The formula EBIT × industry multiple can provide an initial answer to “What is my company worth?” within minutes, but it remains only the starting point. True value is created by the quality of the business and becomes visible in the market. Owners who normalise EBIT carefully, strengthen the relevant value drivers early and manage the sale professionally can achieve a materially better outcome within the same industry.

Calculating adjusted EBIT properly already requires genuine expertise. There are many levers involved in establishing a robust basis for valuation, and that basis is crucial to the final result.

Would you like to understand what your company is realistically worth? Begin with a robust business valuation or arrange a confidential initial consultation with our M&A experts.