High Multiples in the Market?

August 21, 2025

by a searcher from Northwestern University - Kellogg School of Management in Chicago, IL, USA

Hi All, Just wanted to kick off a conversation to what everyone is seeing out there in the market this summer. I am seeing both listed and off market listings with relatively high multiples (4-5.5x) on SDE.....at least in the IL/CO markets. Anyone else seeing this in their respective markets? Curious if anyone has thoughts, comments, or hypotheses on it. I can understand the optimism from some of the owners and future projections, but some of these deals look thin to finance growth while simultaneously servicing debt obligations.

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Reply by a searcher
from University of Washington in Seattle, WA, USA

Agree with ^redacted‌ - you might have to settle for a smaller company than you originally thought, and then come up with ways to scale later. The company I eventually bought was ~1/3 of the EBITDA I was had wanted to buy. On the plus side: the cash I saved and the lower multiple ended up being a up being a blessing in disguise, as we have a lot more room to 1) make mistakes and take risks early on and 2) make investments in critical pivots. For example, we doubled inventory this year to stock up ahead of tariffs and lay the groundwork to swap our manufacturers. We would have been in a pretty rough place without the extra cash on hand. Also, for what its worth in 2023 I regularly saw 5-6x valuations on what valuation guides considered 3-4x businesses, so maybe there is some relief starting to come through as sellers realize that not every business will be snapped up by a strategic. Keep in mind the demographics are on your side and keep looking.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I am seeing this with our clients as well. What I am continually hearing from buyers is that there are a lack of quality deals and that appears to be driving the multiples up on the good deals that they find. Hopefully this will reverse course in the future, but there are a lot of people in the market looking to buy businesses, so that might not change in the short-term. With the above said, I have had many clients lose deals to then bring those deals back to use one to three months later when they do not end up closing at those higher multiples. I am not always informed on why the seller or buyer pulled out, but I have heard everything from re-trades post LOI to declining financial performance, to the inability of buyers to raise capital or debt at the price being paid. I would encourage the buyers out here to still do deals that make economic sense. Don't chase deals that are priced too high because you might turn an otherwise good deal into a bad one for you if you overpay and the cash flow drops off.

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