Indicative Australian SME valuation multiples—and the evidence needed before applying them.
Updated September 2026
Industry multiples are useful reference points, but they are not valuation conclusions. A quoted range may describe businesses with different scale, earnings definitions, buyer pools and transaction terms.
Before applying a multiple, identify the earnings measure, test whether the market evidence is genuinely comparable and adjust for the specific risks and opportunities of the subject business.
KEY TAKEAWAY
Use an industry multiple to establish a starting range, then test the earnings definition, transaction evidence and company-specific risk before drawing a conclusion of value.
What a business valuation multiple measures
A business valuation multiple compares a measure of value with a financial metric such as revenue, EBITDA, EBIT or proprietor earnings. For example, a 4.0x EV/EBITDA multiple applied to maintainable EBITDA of A$500,000 indicates enterprise value of A$2 million before debt, surplus cash, working-capital and other balance-sheet adjustments.
The calculation is simple. Selecting compatible inputs is not. The earnings definition used in the subject business must match the definition underlying the market evidence.
Figure 1. A multiple is one part of the valuation framework; the earnings basis, market evidence and value bridge must remain consistent.
Key valuation terms
- Enterprise value (EV). The value of the operating business before considering how it is financed.
- Equity value. The value attributable to shareholders after adjusting enterprise value for net debt, surplus cash and other relevant balance-sheet items.
- EV/EBITDA. Enterprise value divided by earnings before interest, tax, depreciation and amortisation.
- EV/EBIT. Enterprise value divided by earnings before interest and tax; often a useful cross-check where depreciation reflects meaningful asset consumption.
- EV/PEBITDA or SDE. Owner-operator measures that require their own matched transaction evidence and should not be combined mechanically with EBITDA multiples from managed businesses.
For a fuller explanation of the earnings measures, see EBITDA vs PEBITDA vs SDE.
Business valuation multiples by industry in Australia
The following ranges are broad, indicative observations only. They are not a valuation, offer price or prediction of what any particular business will achieve. Actual results depend on business size, earnings quality, customer concentration, management depth, growth, capital requirements, transaction structure and the quality of the available evidence.
The article edition is 2026; this does not mean every transaction or underlying observation occurred in 2026.
| Industry | Indicative SME range | Multiple basis | Principal value drivers |
|---|---|---|---|
| Accommodation | 2.0x–3.75x | EV/EBITDA | Occupancy, location and lease profile |
| Accounting firms | 0.7x–1.3x revenue | EV/Revenue | Recurring fees and partner transition |
| Advertising and PR | 2.2x–5.0x | EV/EBITDA | Human capital and reputation |
| Aged care services | 3.8x–6.8x | EV/EBITDA | Occupancy and compliance |
| Allied health | 2.2x–5.0x | EV/EBITDA | Practitioner dependency |
| Building construction | 1.0x–2.5x+ | EV/EBITDA | Pipeline, licences and project risk |
| Food manufacturing | 2.2x–4.0x+ | EV/EBITDA | Scale, brand and distribution |
| Financial services | 3.5x–5.5x+ | EV/EBITDA | Recurring revenue and compliance |
| Healthcare | 4.0x–8.0x+ | EV/EBITDA | Referrals, scale and clinical workforce |
| Technology | 4.0x–8.0x+ | EV/EBITDA | Recurring revenue, growth and IP |
| Manufacturing | 3.0x–6.0x | EV/EBITDA | Efficiency, diversification and capex |
| Transport and logistics | 3.0x–6.0x | EV/EBITDA | Contracts, fleet and customer concentration |
| Retail | 2.0x–4.0x | EV/EBITDA | Brand, margins and lease exposure |
| Professional services | 2.5x–5.0x | EV/EBITDA | Team depth and client retention |
| Engineering services | 3.0x–6.0x | EV/EBITDA | Technical capability and contracted work |
| Electrical contracting | 2.0x–4.5x | EV/EBITDA | Maintenance revenue and workforce |
| Civil contracting | 2.0x–5.0x | EV/EBITDA | Infrastructure exposure and pipeline |
| Distribution and wholesale | 3.0x–5.5x | EV/EBITDA | Supplier relationships and customer mix |
| Medical practices | 3.0x–6.0x | EV/EBITDA | Practitioner and patient retention |
| Childcare | 4.0x–8.0x+ | EV/EBITDA | Occupancy, location and compliance |
| Disability services (NDIS) | 3.0x–7.0x | EV/EBITDA | Compliance and participant retention |
| Hospitality | 1.5x–3.5x | EV/EBITDA or PEBITDA | Lease risk, labour and owner involvement |
| Automotive services | 2.0x–4.0x | EV/EBITDA | Technician retention and location |
| Real estate management and rent rolls | 2.5x–4.0x revenue | Revenue multiple | Landlord retention, arrears and portfolio quality |
Source and scope: Indicative observations compiled from published Australian transaction guides, industry reports and selected transaction evidence, including the Factor1 Guide to Business Transactions & Valuations (2024). The ranges provide general market context only and should not be relied upon as a valuation.
Why the range is only a starting point
Two businesses in the same industry with identical reported EBITDA can produce materially different values. A buyer may pay more for reliable recurring revenue, diversified customers, management depth and low reinvestment requirements. The same buyer may discount owner dependency, customer concentration, volatile margins, weak systems or significant capital needs.
Figure 2. Company-specific factors can outweigh the broad industry category.
How to assess whether a multiple is reasonable
A defensible assessment begins with the universe of transactions from which the multiple is drawn. Deal size, geography, date, buyer type, transaction terms and the earnings definition can all affect comparability.
Figure 3. Pressure-test the multiple and document why the selected evidence fits the subject business.
Worked example: earnings to equity value
The following hypothetical example is simplified and illustrative only. It does not represent a valuation or recommended multiple.
| Step | Illustrative amount | Reasoning |
|---|---|---|
| Reported EBITDA | A$1,200,000 | Starting financial result |
| Net normalisation adjustments | (A$50,000) | One-off costs, owner salary and non-operating items tested together |
| Maintainable EBITDA | A$1,150,000 | Supportable commercial earnings base |
| Selected multiple | 3.6x | Illustrative adjustment for concentration, contracts and key-person risk |
| Enterprise value | A$4,140,000 | A$1,150,000 × 3.6 |
| Less net debt and working-capital adjustment | A$900,000 | Illustrative EV-to-equity adjustments |
| Illustrative equity value | A$3,240,000 | Amount attributable to shareholders before transaction costs and tax |
Why Australian SME evidence can differ from overseas tables
Market depth, financing conditions, geography and the size of the buyer universe can affect transaction pricing. Overseas or listed-company multiples may involve businesses with different scale, liquidity, governance and management depth from a privately owned Australian SME.
Use global data as context where appropriate, but explain how the selected evidence relates to the size, location and characteristics of the business being valued.
Common mistakes when using valuation multiples
- Using reported earnings without normalisation. A precise multiple applied to an unreliable earnings base produces an unreliable result.
- Mixing earnings definitions. An EBITDA multiple should not be applied mechanically to PEBITDA or SDE.
- Ignoring size and buyer type. Mid-market evidence may not describe a smaller owner-operated business.
- Treating EBITDA as cash flow. Working-capital and capital-expenditure requirements still matter.
- Stopping at enterprise value. Shareholder proceeds require an explicit bridge for net debt, cash, working capital and other agreed adjustments.
Move beyond the industry average
Expert Business Valuations assesses maintainable earnings, relevant market evidence and company-specific risk for sales, shareholder matters, taxation and strategic decisions.
About the author
Daniel Callegari is a Certified Business Valuer, Licensed Business Broker and Principal Valuer of Expert Business Valuations. He works with business owners, accountants, lawyers, investors and intermediaries across SME and lower mid-market valuation matters. His work focuses on maintainable earnings, risk, transferability and evidence-based valuation analysis appropriate to the purpose of each engagement.
Frequently asked questions
What multiple should I use to value my business in Australia?
Begin with evidence relevant to the industry, business size, earnings measure, geography and valuation date. Then test company-specific risk and cross-check the result. A published range is not a substitute for that analysis.
Can I value a business by multiplying EBITDA by an industry average?
The calculation may provide a preliminary indication, but it does not determine value. Maintainable earnings, evidence comparability, risk and the enterprise-to-equity bridge still require analysis.
Why can two businesses in the same industry have different multiples?
Differences in scale, recurring revenue, customer concentration, management, growth, capital needs and owner dependency can materially change the price a buyer is prepared to pay.
Are revenue multiples interchangeable with EBITDA multiples?
No. They measure value against different financial metrics and may imply very different assumptions about margins and cost structures.
Sources and methodology
The indicative ranges in this article were compiled from published Australian transaction guides, industry reports and selected transaction evidence. The primary source used in developing the ranges was the Factor1 Guide to Business Transactions & Valuations (2024), supplemented by publicly available market information and transaction commentary. The ranges provide general context only.
Editorial note and disclaimer: This article contains general information only and does not constitute valuation, legal, taxation or financial advice. Every business is different, and readers should obtain advice appropriate to their circumstances before relying on any indicative range or worked example.
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