Is anyone else noticing a 4x multiple seems to be the new floor for asking prices?

January 07, 2026

by a searcher in New Jersey, USA

I have been searching for going on 3 years now and in that time I have looked at 100's of CIMs. I can remember when 400k-700k SDE businesses where asking a reasonable multiple of 2.5x to 3.5x (on the high side). Since Q4 last year, I have started noticing most businesses are listed 4x-5x for anything over 400k SDE. I am searching mainly in the Northeast and Mid-Atlantic, so perhaps that has something to do with it? But what are you guys/gals seeing in the wild? Doing the math, 4x is usually too much for the avg self funded searcher to pay using the traditional SBA 80/10/10 funding schema. So does that mean the self funded searcher needs more money to play in the ETA space nowadays or are the brokers swinging for the fences in hopes of finding a buyer that will over extend themselves? Are these higher multiples a reflection of how hot the market is, especially with PE coming downstream and perhaps I need to adjust to the new reality? Let me know your thoughts and insights.

Reply by an intermediary
from George Mason University in Springfield, MA, USA

The question is whether or not they are transacting at those multiples. Asking price is one thing, but what they get can be a different story. I think sellers are focusing on higher multiples because the sheer volume of inbound inquiries they receive independent of a broker. Owners in popular sectors are getting multiple emails a day from interested buyers, buy-side advisors and sell-side advisors. If you've got a lot of people telling you your business is salable and valuable, it's going to resonate and influence their mindset around value.

Reply by an intermediary
from The University of Chicago in Chicago, IL, USA

As many have said there are many, many factors. But math has to work. Assume following: EBITDA multiple (not SDE), 0% growth, 10% Interest, 10 yr amortization, WC included in price, No WC financing, CapX = 10% EBITDA, Then a) If E =10%, D = 90% (Bank + Seller), P will be 4.1 x, IRR will be 50% (Equity % controls the multiple) b) If IRR = 35%, then E = 17%, D = 83% (Bank + Seller), P will be 4.5 x (IRR controls the multiple) Impact of interest: If interest rate drops to 8% Then a) with E= 10%, multiple will be 4.5, IRR 43% b) with IRR = 35%, E=17%, multiple will be 5, IRR 35% Key math: i) As Equity % reduces, P reduces b/c it is determined by debt-service, and IRR shoots up. Higher IRR opens the door for Searcher to bring in investors. ii) As Equity % increases, P goes up till the IRR is achieved. iii) Debt capacity of a business has nothing to with available equity. iv) Market data is important, but the variations are high. This implies either x) data inaccuracy/inconsistency or y) one of the parties in the transactions had few drinks.

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