What actually sets the multiple?
The size of the earnings base, how much of the revenue is contracted or repeatable, customer concentration, dependence on the founder, growth, and the capital the business consumes to produce its cash flow. Every buyer's model weights these differently; every buyer's model contains them. A sector average is the starting point of a negotiation about which of these factors your business carries, not a quote.
The factors compound rather than add. A business with recurring revenue, a spread customer base, and a management team that runs without the owner is not merely avoiding three discounts; it is the asset the largest population of buyers is mandated to buy, and competition for it is what moves a price above any average.
The discounts are measured, and they are larger than owners expect. Owner dependence compresses lower-middle-market multiples by 20% to 40% (Livmo, April 2026), and a key-person discount of 15% to 20% or more is applied directly to company value in valuation practice (MarshBerry, 2024 to 2026). Customer concentration carries haircuts in the 20% to 40% range (MetricHQ, June 2026), and a single customer above 30% of revenue has triggered further reductions of 20% to 35%, with some buyers and lenders declining outright (FOCUS Investment Banking, July 2025, on first-half 2025 deal experience). The linked positions quantify each of these with their sources.
What is a defensible anchor right now?
Start with what is actually published. Transactions above $250m of enterprise value averaged 12.2x EBITDA in the first quarter of 2026 (Capstone Partners, Capital Markets Update, 4 June 2026). Below that, the most recent published table of middle-market multiples by size band covers the first nine months of 2025: average enterprise value to EBITDA running from 5.9x at $10m to $25m of enterprise value to 10.0x at $100m to $250m (GF Data, published 27 January 2026). No current, public, size-band print exists as at August 2026, and a quarterly figure circulating for early 2026 has no traceable source.
That gap is the single most useful thing an owner can know about valuation data, because most of the numbers owners anchor on come from a different market: a large-cap print, a stale table, or an untraceable quote. The defensible anchor is the last published median for the relevant size band, stated with its date, adjusted for what is known to have changed since, and treated as a floor to negotiate up from rather than a promise.
The median itself deserves a precise reading. It is what a business is worth to a buyer who is not competing for it, and roughly half of transactions clear below it by construction. Everything above the median is paid by a second bidder who believes the first one might win.
Where does a price above the median come from?
From the work done before launch, mostly. The premium paid for institutionalized businesses, documented processes, a management layer, financials that survive a quality-of-earnings review, ran 30% to 40% in a recent analysis of sponsor and aggregator transactions (Golden Door Asset Management, 2026 M&A Valuation Matrix, on fourth-quarter 2025 transactions). Several of the discount factors above are addressable in the quarters before a process, which is why the highest-return valuation work happens before anyone sees the business.
The rest comes from the process itself. A risk the seller surfaces and evidences is a discount avoided; the same risk found by the buyer's diligence is a retrade. And a buyer list that puts more than one credible type of acquirer at the table changes what the leading bidder must assume about the alternatives. We will not quote a multiple before the earnings work is done, and an owner should be wary of anyone who will.