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BizBuySell calculates a pricing multiple by dividing a known sale price by revenue or cash flow. A company with $500,000 of revenue that sold for $1 million has a revenue multiple of 2. Owner-operated businesses with earnings under $1 million are benchmarked on seller's discretionary earnings. Larger, professionally managed companies use EBITDA. Restaurants typically see an earnings multiple around 2, and an automated car wash can see a cash flow multiple well over 4.
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SMB owners planning a sale can turn a recent comparable into a revenue or cash-flow multiple and see why a restaurant prices near 2 times earnings while a car wash can price well over 4. Brokers can apply the same SDE-under-$1-million versus EBITDA split.
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