Valuation on a Regional B2B Retail/Distribution Deal in Canada?

Hey all, I’m evaluating a potential acquisition in Canada — a long-established regional B2B retail/distribution company selling a mix of office supplies, furniture, and janitorial products to commercial and government clients. It’s the dominant player in a small market with limited local competition. Key details (rounded for confidentiality): Annual revenue: mid–$4M range Normalized EBITDA (TTM): ~$625K Historical EBITDA has been as high as ~$800K in stronger years 12 employees, stable long-term staff Owner still involved part-time (15–20 hrs/week) Clean financials, minimal debt Asking price: $3.2M CAD, with proposed earnout structures My valuation work (with lenders and advisors): $1.9M–$2.2M CAD based on comps and EBITDA multiples of 3–3.5x The sellers believe EBITDA will rebound next year, but I’m hesitant to price in any forward optimism given recent top-line decline (~15–20% YoY). My questions: For those with experience in small-market or regional distribution businesses — are you seeing multiples above 3.5x for deals in this size range? How do you approach conversations where the seller is fixated on future performance or earnout-based pricing, but current TTM numbers don’t justify it? Would you walk away or keep the door open for future negotiation if the seller isn’t budging from their price? Appreciate any perspective from those who’ve closed or passed on similar deals. Thanks in advance!