What Is the Average Business Valuation Multiple in 2025

If you are planning to sell a business, or are simply curious about what your business might be worth, understanding how businesses are typically valued can give you a useful starting point. One of the most commonly used methods is the multiples approach. This method compares a business to similar companies that have recently sold, using metrics like cash flow (earnings) or revenue to estimate value.

In this article we explore what the “average valuation” has looked like across sectors in recent years, drawing on aggregated data from the marketplace BizBuySell (2020–2025). These benchmarks can help give a realistic sense of valuation ranges while emphasizing why context matters.

What Is a “Multiple” in Business Valuation

A “multiple” is a ratio used to estimate a business’s value by comparing sale price to a financial metric which is most often cash flow (owner’s earnings) or gross revenue. The logic is simple: if a business generates, say, $500,000 per year in earnings, and comparable businesses sold for 3 times earnings, then a prospective sale price could be $1.5 million.

Between revenue-based and earnings-based valuation, earnings (sometimes expressed as Seller’s Discretionary Earnings, or SDE) is generally more reliable. Revenue only shows total sales; it does not reveal the costs, margins, or how much the owner actually makes.

Because businesses differ widely in margin, growth potential, owner involvement, and risk, “multiples” vary significantly by industry, size, and business model. This data from BizBuySell reflects real-world private business sales, making it a useful, grounded benchmark.

Overall Market Multiples: What BizBuySell Data Shows

Based on private business sales in the U.S. between Q3 2020 and Q2 2025, BizBuySell reports the following average multiples across all businesses:

• Average earnings multiple (SDE): about 2.53×

• Average revenue multiple: about 0.66×

• Median sale price: approximately US$ 329,000, rising to US$ 352,000 as of Q2 2025.

These figures reflect mostly small and “main‑street” businesses with many selling for less than US$ 1,000,000.

Important to note: while revenue multiples may seem appealing for simplicity, using earnings (cash flow) multiples gives a more realistic measure of how valuable a business is to a buyer because it reflects how much the owner actually takes home after expenses.

How Multiples Vary by Industry

The “average” valuation multiple only tells part of the story. In practice, multiples can vary widely depending on the industry, business type, and other factors. According to BizBuySell’s aggregated data (2020–2025), here are some representative industry‑specific multiples:

* Median sale price reflects what businesses in that sector actually sold for in the dataset.

From the table we can see some patterns:

• Sectors like Online & Technology and Automotive & Boat tend to have higher earnings multiples (above 3×), reflecting stronger cash flows or growth potential.

• More asset or labor‑intensive sectors (like Restaurants or Retail) often have lower revenue and earnings multiples, perhaps due to lower margins or higher operating risk.

• A service business with stable cash flow and minimal owner involvement often commands a mid‑range multiple.

What Influences Where a Business Falls in the Range

While industry benchmarks are a useful starting point, many additional factors influence a business’s final valuation. According to valuation experts, these include:

• Owner involvement: Businesses that run with minimal owner oversight (e.g. managed by employees) tend to be more attractive and buyers treat such businesses like passive investments.

• Stability and type of cash flow: Recurring revenue, loyal customer base, and predictable profits tend to boost multiples. Conversely, volatile or seasonal revenue can reduce value.

• Growth potential and market trends: Industries experiencing growth, strong demand, or favorable macro conditions often see higher multiples.

• Risk factors and business “owner dependency”: If the business value is strongly tied to the current owner’s presence or relationships (clients, suppliers), the perceived risk increases and the multiple may go down.

• Local market specifics and interest from buyers: Valuation depends also on local demand, competition, and how many buyers are actively seeking businesses in that region or sector.

Recent Market Trends (2023–2025)

While multiples provide a useful snapshot, market conditions fluctuate with economic cycles, interest rates, and broader macroeconomic factors. According to the most recent data from BizBuySell:

• Sale prices and valuations rose through 2022, buoyed by supply constraints and strong demand.

• As interest rates climbed in 2023, sale prices cooled.

• By 2025, the market has rebounded somewhat: the overall median sale price across small businesses increased, reflecting renewed buyer interest.

• Sectors such as Manufacturing, Technology, and Construction saw significant growth in transaction volume, signaling strong demand for businesses in those industries.

Even so, the fastest-moving businesses tend to be those with stable cash flow, owner independence, and growth potential. Buyers remain cautious about high-risk, owner-dependent, or declining-margin businesses.

Why These Benchmarks Matter for Buyers and Sellers

For potential sellers, these data points help set realistic expectations. The “2.5× SDE / 0.66× revenue” guideline gives a baseline but business owners should adjust based on their industry, profitability, growth prospects, and risk factors. A business that checks many boxes (stable cash flow, strong margins, minimal owner involvement, growth potential) could command a premium.

For buyers, multiples help evaluate offers, but they must “normalize” earnings first. That means adjusting for one-time costs, non-business expenses, and new owner compensation, to see the true benefit. Because revenue alone doesn’t tell the whole story, you need a full picture of profitability, operations, and future prospects.

Brokers, investors, and advisors often use benchmarks but they complement them with qualitative assessments: management strength, scalability, market position, and business-specific risks.

Limitations You Should Know

While aggregated multiples offer useful guidance they come with caveats:

First, data from platforms like BizBuySell tend to reflect smaller “main street” businesses often under US$ 1 million in sale price. These multiples may not apply to larger or more complex businesses with different capitalization, growth trajectories, or risk profiles.

Second, because each business has unique circumstances, relying purely on multiples can be misleading. Two companies in the same industry with similar revenue might have vastly different values if one has loyal clientele, recurring revenue, and minimal owner dependency, while the other depends heavily on a single owner and has shaky finances.

Third, these numbers rely on self-reported earnings and sale prices, which may vary in accuracy depending on how owners and brokers prepare the financials.

Finally, external economic factors such as interest rates, inflation, and labor costs, can change quickly and influence buyer behavior, deal structure, and valuations.

Practical Takeaway for Business Owners and Buyers

If you are evaluating a business for sale, or considering selling, here are a few practical guidelines based on current data:

• Use earnings (SDE or cash flow) as your primary valuation metric and not revenue.

• Start your valuation estimate using baseline multiples (roughly 2.5× SDE or ~0.65‑0.7× revenue), then adjust up or down depending on industry, growth prospects, stability, and risk.

• Compare your business to recent sale data in your sector e.g. from BizBuySell but remember that local market conditions may differ.

• Normalize earnings: subtract one‑time expenses, non‑business costs, and adjust owner compensation to reflect new owner scenario.

• Factor in qualitative factors: owner involvement, customer loyalty, recurring revenue, and growth potential.

Conclusion

Valuation multiples provide a convenient, data-informed starting point for estimating what a business might sell for. Based on recent aggregated sales data from 2020–2025, the typical small business in the U.S. sold for around 2.5× its earnings or 0.66× gross revenue. Industry, stability, profitability, and owner involvement all play major roles in whether a business lands above or below those benchmarks.

For business owners and buyers, these benchmarks, especially when combined with careful financial normalization and realistic assessment of non‑financial factors, can help anchor expectations and guide decision-making.

External Resources for Further Reading

• “How to Value a Business” Guide — BizBuySell

• “Valuation Multiples by Industry: Revenue & Earnings (SDE)” — BizBuySell Learning Center

• Overview of the Multiples Approach in Valuation — Investopedia