The multiple is calculated by dividing enterprise value (equity market cap plus net debt) by adjusted EBITDA. Because it strips out capital structure differences, tax regimes, and depreciation policies, it allows direct comparison across companies — making it far more useful for private-company transactions than price-to-earnings ratios. In European mid-market M&A, it is the primary pricing reference in almost every deal.
Multiples vary materially by sector, size, and quality. The Argos Mid-Market Index H1 2026 shows European SME transaction medians ranging from 4.5× in consumer/retail to 13.5× in software. Within any sector, two businesses with identical EBITDA can trade 2–3 turns apart depending on revenue visibility, customer concentration, and management depth. Size matters equally: businesses below €1m EBITDA typically carry a 1.5–2.5× discount to their sector median.
Crucially, the multiple is applied to normalized EBITDA — not reported EBITDA. A buyer's first move is to restate reported earnings for one-off items, owner-specific costs, and non-recurring charges. Sellers who understand this distinction and pre-normalize their EBITDA before a process avoid the most common form of late-stage price chipping.
Worked example
A business services company reports €2.5m EBITDA. After adding back €300k of restructuring costs and €200k of above-market founder salary, normalized EBITDA is €3m. At the sector median of 9.2× (Argos H1 2026), enterprise value is €27.6m. Deduct €2m of net debt: equity value is €25.6m — and what the seller actually receives before tax.
Frequently asked questions
What is a typical EV/EBITDA multiple for a French or Swiss SME?
Mid-market SMEs in France and Switzerland trade between 5× and 12× EBITDA depending on sector and quality. Argos H1 2026 shows medians of 9.2× for business services, 6.8× for industrial businesses, and 10.4× for software. Below €1m EBITDA, expect a 2–3× size discount; above €5m, the range opens upward.
What is the difference between enterprise value and equity value?
Enterprise value is the total price a buyer pays for the business, including net debt. Equity value is what the seller actually receives: enterprise value minus net debt (or plus net cash). A company valued at €20m EV with €3m of net debt returns €17m to selling shareholders — not €20m.
How can I improve my EV/EBITDA multiple before a sale?
Four levers consistently move multiples: increasing recurring/contracted revenue share, reducing customer concentration (especially any single client above 20% of revenues), documenting management depth so value is not tied to one person, and improving EBITDA margin above the sector median. A focused 12-month exit preparation programme typically moves the multiple by 0.5–2×.