Is there a benchmark for minimum EBITDA Margin?

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July 07, 2025

by a searcher from University of Pittsburgh in Washington, DC, USA

Hello All, I am doing my search and going through various firms books. And there is one thing I am wondering about. As I set parameters for my search, is there a benchmark/KPI for EBITDA Margin? I am filtering out firms that do not have a margin of at least 20%. In your experience, is that too high of a number? Too low? Any insight is greatly appreciated. Thanks,
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Reply by a searcher
from California Polytechnic State University in Oakland, CA, USA
it'll vary by industry and deal sizes
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from Tufts University in Jersey City, NJ, USA
Echoing others, it will be completely industry-specific. There's no industry-agnostic benchmark for what constitutes "good" profitability, as 20% EBITDA margin might be terrible in one sector and 10% EBITDA margin might be excellent in another. Understanding what is normal and good for a specific industry is crucial before considering buying in that sector, since you're going to struggle to perform adequate due diligence and assign a fair valuation if you don't know what a normal and good [insert sector] business actually looks like.
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