Every owner who calls wants to know the multiple, and the question usually arrives before I have learned what the business does. It is a fair question. It is also the question most likely to get answered dishonestly by someone trying to win a listing.
So here are the actual SDE multiple ranges we use when we take a business to market in Texas, where those numbers come from, and the five factors that decide which end of your range you land on.
What a Multiple Actually Measures
A business valuation multiple is a reflection of risk and owner-transferable value, not a measure of size or revenue. This is the single most common misunderstanding I run into. Many owners assume that if their business has high revenue, they will automatically command a higher multiple.
Buyers do not see it that way. They view multiples as a measure of risk and predictable future performance. Two companies with identical earnings can fetch completely different multiples based on key operational risks such as owner dependence, customer concentration, and revenue quality.
Think about what a buyer is actually purchasing. They are not buying last year's profit. They are buying the probability that the profit continues after you hand over the keys. Every risk that lowers that probability lowers the multiple, and every system that raises it raises the multiple. Revenue is almost incidental to that calculation.
One clarification before the numbers, because mixing these up is what leads owners astray: the ranges below are multiples of seller's discretionary earnings (SDE), not EBITDA and not revenue. SDE adds your own compensation and discretionary expenses back into earnings, so for an owner-operated business SDE is typically the larger number. A 3x SDE multiple and a 3x EBITDA multiple are not the same deal.
SDE Multiples by Industry in Texas
These are the ranges behind our business valuation calculator, and they reflect where owner-operated Texas businesses actually transact.
| Business type | Typical SDE multiple |
|---|---|
| HVAC, plumbing, electrical, construction | 2.50x to 3.75x |
| Landscaping, cleaning, pest control, pool, other home services | 2.25x to 3.25x |
| Vending, ATM, amusement, or delivery routes | 1.50x to 2.50x |
| E-commerce, software, online business | 3.00x to 4.25x |
| Professional services | 2.25x to 3.25x |
| Medical, dental, veterinary, health practice | 2.75x to 3.75x |
| Manufacturing, distribution, trucking | 2.75x to 4.00x |
| Auto, fitness, personal services, franchise | 2.25x to 3.25x |
Two things worth noting about the spread between industries. The route and vending category sits lowest because the earnings are tied to equipment and placement agreements that a buyer can often replicate independently. The manufacturing and distribution category reaches higher because contracts, equipment, and trained labor are genuinely hard to rebuild from scratch, which is the definition of a defensible business.
Size also moves the range. Once a business clears roughly $250,000 in annual SDE, it becomes accessible to a meaningfully larger pool of buyers, including small platforms and SBA-financed operators with real acquisition experience. More competition means better pricing, and we add roughly half a turn to both ends of the range at that threshold.
The Five Factors That Decide Where You Land
Within your industry range, five specific things move a business from one end to the other. These are the largest factors in determining which end of the multiple range you land on, and we make sure to discuss every one of them with our sellers before taking the business to market.
- Clean accounting. Financial statements a buyer can verify without an argument. Personal expenses separated out, add-backs documented, two to three years of consistency.
- Transferability. Whether the relationships, contracts, licenses, and systems actually convey to a new owner, or whether they live in your head and your phone.
- Owner involvement. How much of the business runs through you personally. The less it does, the more the business is worth.
- Years in business. Operating history is evidence. A company that has made it through multiple cycles carries less risk than one with a short track record, regardless of how good the recent numbers look.
- Growth over the past few years. Direction matters as much as level. Buyers pay for trajectory, and flat or declining revenue pulls a business toward the bottom of its range even when earnings are solid.
Depending on your urgency to sell, we want to make sure we work on all of these if any are in limbo. That is the real value of starting the conversation early rather than the week you decide to exit. Our 12-month checklist for preparing a Texas business for sale walks through the sequence.
Why You Will See Brokers Quote Higher Numbers
Search your industry and you will find brokers advertising multiples well above the ranges on this page. It is worth understanding why.
The numbers we work from are published by sources that have actually closed deals: the International Business Brokers Association, BizBuySell, and comparable transaction data. When you see a broker push a large multiple, they are usually looking for a phone call. Or, worse, they want you to list with them and then let the market push your business down into the right multiple pool on its own.
That second version is the one that costs sellers real money. A listing that goes to market overpriced sits. It gets stale. The eventual buyer arrives knowing it has been available for nine months, and that knowledge becomes leverage against you in the negotiation. Some brokers will do anything for a listing, including a bad valuation.
For context on the ceiling: below $1M in EBITDA, 5x is the practical ceiling in Texas, and most businesses transact well below it. Deals above 5x happen, but they require something specific. A strategic buyer with real synergies, usually a competitor who wants your customer list or your geography. A genuine recurring-revenue moat with contracts that convey. Or a growth rate that changes how a buyer underwrites the future. If a broker quotes you above 5x, ask which of those applies to your business. If they cannot name one, you are looking at a marketing number.
At Anchorpoint we go to market with the correct valuation, and it leads to faster, better results. A business priced where the market actually is attracts competing buyers instead of repelling them, and competing buyers are what produce a premium.
Finding Your Own Range
If you want a starting point on your own business, our business valuation calculator asks four questions and returns a range using the multiples on this page. It takes about a minute and it is the same arithmetic we start from.
A calculator cannot evaluate your accounting, your contracts, or how much of the operation depends on you, which is exactly what moves you within your range. For a deeper look at how a real valuation is built, see our guide on how to value a business in Texas.
When you want a number that accounts for the five factors above, that conversation is free and confidential. Request a valuation here.