As a seller, is it better to have a higher or lower EBITDA multiple?
Sellers want to maximize the EBITDA multiple. Buyers want the opposite – they want as low of an EBITDA multiple as possible. Business brokers will often use EBITDA multiples from recent transactions in the industry to understand what EBITDA multiple a buyer might be willing to pay when they set the purchase price.
The visual below illustrates how an EBITDA multiple is calculated, along with who benefits from a higher or lower EBITDA multiple.
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