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EBITDA Multiples by Deal Size and Industry: 2024 Private Company Transactions
In 2024, the landscape of private company transactions revealed interesting trends in EBITDA multiples across various industries and deal sizes. This article examines the EBITDA multiples for privately held companies with Total Enterprise Values (TEV) ranging from $4 million to $500 million based on transactions closed in 2024.
General Trends
The overall trend in 2024 showed that EBITDA multiples generally increased with deal size across industries. This correlation between deal size and multiple is consistent with historical patterns, reflecting the premium placed on larger, more established businesses.
Industry-Specific Multiples
Technology Sector
The technology sector, particularly software and SaaS companies, commanded some of the highest multiples in 2024:
- For deals between $5-20 million: 8.8x to 9.0x EBITDA
- For deals above $500 million: Approximately 17.6x EBITDA
B2B SaaS companies with EBITDA between $5-10 million saw multiples of around 12.5x.
Manufacturing
The manufacturing sector showed resilience in 2024, with a notable increase in valuation multiples:
- Average multiple: 11x EBITDA (up from 10.2x in late 2023)
- Deals under $25 million: Approximately 5.6x EBITDA
- Deals between $100-250 million: Around 8.0x EBITDA
Finance Sector
Financial services companies maintained strong valuations:
- Overall sector multiple: 9.8x EBITDA
Information Sector
Information companies saw a significant uptick in valuations:
- Sector multiple: 17.6x EBITDA (increased from historical average of 11.0x)
Deal Size Impact
The impact of deal size on EBITDA multiples was evident across industries:
- $1-3 million EBITDA range: 7.3x to 9.8x (varying by industry)
- $3-5 million EBITDA range: 9.1x to 12.0x
- $5-10 million EBITDA range: 10.7x to 12.8x
For the broader middle market:
- Average EV/EBITDA multiple: 8.6x (slightly down from 8.7x in 2023)
Factors Influencing Multiples
Several factors influenced EBITDA multiples in 2024:
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Industry Growth Prospects: High-growth sectors like technology and healthcare commanded higher multiples.
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Company Size: Larger companies generally received higher multiples, with a significant jump observed for deals above $500 million.
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Profitability: Companies with higher EBITDA margins typically attract higher multiples.
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Market Conditions: The gradual economic recovery and stabilizing interest rates positively impacted valuations.
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Data Accuracy: Buyers placed a premium on companies with accurate and readily available financial information.
Conclusion
The 2024 private company transaction landscape demonstrated that EBITDA multiples varied significantly across industries and deal sizes. While the technology and information sectors led with the highest multiples, traditional sectors like manufacturing also saw healthy valuations. The correlation between deal size and multiple remained strong, with larger transactions commanding premium valuations. Understanding these industry-specific and size-based multiples for business owners and investors is crucial for accurate valuation and strategic decision-making in M&A activities. However, it's important to note that individual company characteristics, growth potential, and market conditions can cause significant deviations from these average multiples.
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