What is the EV/EBITDA multiple?
The EV/EBITDA multiple is enterprise value divided by EBITDA: the usual yardstick for what a company is worth in private equity deals. Enterprise value is equity value plus debt, minus cash. The multiple shows how many times its annual EBITDA a buyer pays for the whole business, and it lets buyers compare companies of different sizes.
Why it matters to a revenue leader
The multiple turns operating results into price. At 10 times, each extra dollar of EBITDA adds $10 of enterprise value, so pricing gains and better service margins have outsized effects. Multiples also reflect business quality: buyers tend to pay more for recurring, predictable revenue than for one-off project work. A revenue leader who shifts the mix toward agreements can raise both EBITDA and the multiple.
How to calculate it
EV/EBITDA = (equity value + debt minus cash) ÷ EBITDA. In private deals, buyers usually apply the multiple to adjusted EBITDA.
Common mistake: comparing multiples across companies with very different capital spending, since EBITDA ignores capex.
Example
Fictitious numbersA testing laboratory has EBITDA of $8M, debt of $30M and cash of $2M. A buyer offers 11 times EBITDA, an enterprise value of $88M. After net debt of $28M is repaid, equity holders receive $60M.
"Which parts of our revenue earn a higher multiple from buyers, and are they growing as a share of the total?"
Sources
- EV/EBITDA: Definition, Formula, Uses and Pros and Cons checked 9 Oct 2026