Valuation for 2021 EBITDA higher than other years

Not sure of your situation, but it sounds like the issue is you getting comfortable with the growth. I would be trying to find out what drove it, and do you expect to be able to sustain it? As others have said, 3.75x is a reasonable multiple. Being 5 months into 2022 you should ask for current P&Ls with year-over-year comparisons. If the seller has grown the company, and not had a one-time windfall from government policies related to the pandemic, then likely they will get 3.75x. My concern would be that the level of pet ownership skyrocketed during the pandemic, and many of those are sadly being abandoned/returned. https://nypost.com/2021/05/11/pets-adopted-during-the-pandemic-are-being-returned-at-record-numbers/

Agree with Clement on valuation of 3.75x 2021 sounding ok, unless you're confident 2022+ will decline from the 2021 level. I might take the strategy of acknowledging to the seller that 3.75x 2021 could be reasonable if he or she can help you get more comfortable with the 2021 EBITDA #, but that the difference between 500k and 1mm EBITDA is a 4x and 8x valuation, so they need to make the case. Perhaps you can land them closer to 3x 2021 and share with them that it's 6x former years which is a way to meet in the middle, something along those lines.