We are told that our industry average multiple is around five times EBITDA, but some of our competitors are selling for much higher. What specific operational levers actually move our multiple to the top of the range?

Question

Tyler Smith · Accepted Answer

Many owners assume that their industry average multiple is a fixed constraint, but multiples exist on a spectrum. What actually moves your business from a low-tier multiple to a premium multiple is the elimination of operating risk. Buyers pay a premium for predictability, scalability, and ease of transition.

To expand your multiple, you must systematically build value drivers before you go to market. Use the Step by Step Exit framework to identify your operational gaps. The single biggest driver of multiple expansion is low owner dependency. If your business relies on you to close deals or make operational decisions, your multiple is discounted.

You must prove that your business runs entirely on its own. Document your core processes and ensure your leadership team fully owns their seats on the Accountability Chart. They must demonstrate that they have GWC™ (Get It, Want It, Capacity to Do It) for their roles. Additionally, you must clean up your financial reporting. Transitioning to audited or thoroughly reviewed financial statements reduces the buyer's perceived risk. This financial clarity, combined with an independent leadership team, allows you to command the top end of the valuation range.