Glossary · Reading the business
Multiple
In short
Price divided by earnings. A business earning $500K listed at 3x costs $1.5M. Multiples let you compare deals of different sizes.
What it means in a deal
The multiple is the language of business valuation — it compresses a deal's pricing into a single ratio that lets you compare deals of different sizes and industries. Multiples vary dramatically: a high-margin professional-services firm might trade at 4–6x SDE while a single-location restaurant might sell at 1.5–2.5x. When a seller quotes a multiple, ask what the earnings number is and whether it's based on the most recent year, a three-year average, or a projection.
Related terms
Common questions about Multiple
- What if the business assets are located in multiple states, requiring multiple UCC filings?
- How is life insurance structured when a business has multiple key owners?
- What if the business I'm acquiring operates across multiple distinct industries?
- How does common management between multiple businesses trigger affiliation for SBA size purposes?
- What if my business has multiple locations; can all of them be covered?
- If my acquiring business has multiple owners, how is the personal guaranty requirement applied?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-16 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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