A Girlfriend’s Guide to Exit Multiples: What Your Business Could Actually Be Worth

I want to talk about something that every woman business owner should understand, whether she’s planning to sell her business next year, in 10 years, or hasn’t considered the possibility yet.

Multiples.

I know. Not exactly the sexiest word in entrepreneurship. But stay with me, because understanding multiples could fundamentally change the way you build your business.

When I talk to women founders about their companies, I hear a lot about revenue. But here’s what I want you to understand: Revenue tells you how big your business is. Earnings, along with the multiple a buyer is willing to pay, help determine what your business is actually worth. And those are two very different things.

First, what the heck is a multiple?

A multiple is essentially the number a buyer applies to a financial measure of your business to estimate its value.

Let’s say your business generates $500,000 in annual earnings and buyers in your industry are paying five times earnings. Your business could potentially be worth $2.5 million.

Except not every business gets a five-times multiple. A retail business may be valued differently from a technology company, just as a marketing agency may differ from a consumer products brand. And even two businesses operating in the same industry, generating the exact same revenue, can sell for wildly different amounts.

That’s because multiples are influenced by two things: the market you’re operating in and the quality of the business you’ve built.

EBITDA versus SDE: Let’s make this simple

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a way of looking at the profitability of a business before certain financing, tax, and accounting expenses.

SDE, Seller’s Discretionary Earnings, may actually be the more relevant number for smaller businesses. Think of SDE as the total annual financial benefit a working owner receives from the business, including their compensation and certain legitimate adjustments.

As businesses get larger, buyers generally evaluate EBITDA because the cost of having a professional management team becomes a real operating expense. You can’t simply add back an owner’s entire salary if someone else will need to be hired to do that job.

Both EBITDA and SDE help us understand earning power. They just look at it through slightly different lenses.

And if you’re building toward an exit, you should understand both.

Your industry has a multiple range, and you probably can’t control it

You cannot control the market multiple range for your industry.

Multiples are influenced by economic conditions, interest rates, the availability of financing, buyer demand, and what comparable businesses are selling for. None of that is within your control.

But here’s what is: Where your business falls within that multiple range.

That’s why I want you to know your industry’s multiples before you’re ready to sell. Once you know the range, you can build toward a target.

The Entreprenista Exit Multiples Cheat Sheet

Looking at actual transaction data, the following ranges reflect the middle 50% of completed small-business sales reported by BizBuySell from 2021 through 2025. These are based on SDE, making them most relevant to smaller, owner-operated businesses.

Industry: Small-business SDE multiple

• Retail businesses: 1.62–3.08x
• E-commerce / online businesses: 2.63–3.99x
• Software / SaaS businesses: 2.38–4.00x
• IT and tech-enabled services: 2.20–3.87x
• Graphic and web design agencies: 2.09–3.40x
• Schools and education businesses: 1.56–2.98x

Size matters a lot

A business generating $750,000 in annual revenue isn’t typically valued the same way as one generating $7.5 million. Larger businesses attract a different universe of buyers, including strategic acquirers, holding companies, and private equity firms.

Those buyers may value the company differently because it has more established management, consistent earnings, and potentially greater opportunities for growth.

The bottom line? Your industry matters, your earnings matter, and your size matters. But none of these multiples tells your entire story.

The five things that can move you toward the higher end

Here's where I want you to pay attention: what you can actually influence.

1. Build predictable revenue

Buyers love predictability. Monthly retainers, subscriptions, repeat purchases, and long-term contracts can make a business more attractive because they reduce uncertainty about future earnings.

2. Protect your profit margins

Growing revenue without growing profitability isn’t necessarily creating more value. I would much rather see a business generating $3 million in revenue with strong margins than one generating $5 million and barely breaking even.

3. Make yourself less essential

If every client relationship, hiring decision, creative idea, and operational problem runs through you, buyers aren’t just purchasing a business. They’re purchasing something that may struggle to survive without you. And that’s a risk.

4. Diversify your customers and revenue streams

If one client accounts for 60% of your revenue, what happens if that client leaves? Buyers ask that question too.

A diversified customer base can make your earnings more sustainable and your company more attractive.

5. Build something difficult to replicate

It might be proprietary technology, intellectual property, exclusive relationships, a uniquely valuable brand, or a highly specialized capability.

Whatever it is, think about what makes your business meaningfully different from the competition. These are the qualities that can help turn a good business into a highly desirable acquisition.

You don’t have to want to sell tomorrow to build a valuable business today

When I sold my first company, I learned that an exit isn’t just about a transaction. It’s about creating the freedom to decide what comes next.

Maybe you’ll sell in five years or pass the company to your children. Maybe you’ll decide you love running it and never want to leave. But you should know what you’re building and what it could be worth.

So here’s my challenge: Find out what businesses in your industry are selling for. Understand whether your business would be evaluated on SDE or EBITDA. And start thinking about what you could do today to increase your earning power and improve your position within that multiple range.

Because you may not be able to control the market multiple, but you have tremendous influence over the business you bring to market.

And the earlier you understand that, the more options you’ll have when it’s time to decide what’s next.

Related articles by Carrie Kerpen:

I’m Taking August Off to Prove My Business Can Run Without Me

Nobody Actually Retires, So Stop Planning Your Exit Around It

You Don’t Need to Be Everywhere This Summer. You Need to Be Here.