Company valuation often revolves around multiples. But not every industry is viewed through the same lens. A software company might be sold for 8x EBITDA, while a retailer would be lucky to get 4x. The difference lies in risk, growth potential, and industry dynamics. In this blog, you’ll learn why multiples vary by industry and how to use benchmarks wisely.
Why do multiples vary by sector?
Multiples express how much buyers are willing to pay for one euro of profit or revenue. Sectors with high growth and scalability receive higher multiples, while companies with thin margins or high risk are valued lower. Broadly speaking, there are three patterns:
- IT and software often command the highest multiples due to their scalability and recurring revenue.
- The manufacturing and retail sectors score lower due to their capital intensity and thin margins.
- Healthcare and pharmaceuticals tend to fall in the middle: stable but less growth-oriented.
Indicative ranges
Although every deal is unique, benchmarks reveal clear differences. Indicative (EV/EBITDA):
- Software / SaaS: 6–12x
- Healthcare & Pharmaceuticals: 5–8x
- Logistics & Industry: 4–6x
- Construction & retail: 3–5x
These are broad ranges: a SaaS company with high churn won't reach 10x, while a strong retail concept can exceed 5x.
What else do buyers look for?
The sector provides a general direction, but a company’s position within that range is determined by company-specific factors such as: contract stability, margins and pricing power, customer concentration, and the geographic market. For example, a medium-sized SaaS company in the U.S. may still be worth significantly more than a comparable player in Europe.
How can you use benchmarks wisely?
Benchmarks are a point of reference, not an absolute truth. Use them to put your valuation into context, but also highlight where you exceed the industry average. Buyers are willing to pay a premium if your margins, customer retention, or scalability are stronger than the norm. That’s why advisors often combine benchmarks with a DCF analysis, so you have a convincing picture of both the market and the economic fundamentals.
Frequently Asked Questions
Why are multiples higher in the U.S. than in Europe?
Because the markets are larger and more scalable, and investors pay more for growth.
Should I always benchmark my business?
Yes, because buyers do it too. But use it wisely: as a starting point for the discussion, not as an endpoint.
Are the ranges always reliable?
Only if the selected benchmarks are truly comparable in terms of scale, margins, and sector.
Wondering what multiples are currently in use in your industry and how you can convincingly outperform the average? Hogenhouck helps you translate market data into a valuation that suits your company.
