I work in M&A advisory and spent the past two years building a database of 25,700+ completed business sales. Every transaction is sourced from Capital IQ, SEC filings, verified press releases, or real deals I have worked on — no estimates or projections.
I thought I knew what drove valuations after 15 years in this space. The data taught me I was wrong about a few things. Here's what stood out:
1. Size is the single biggest multiplier — and it's not close.
A business doing $500K in profit typically sells for 2-3x earnings. The exact same business model doing $5M in profit sells for 5-7x. That's the difference between walking away with $1.5M and $35M. Buyers pay more for scale because larger businesses have more infrastructure, more financing options, and less key-person risk.
2. Customer concentration is a silent killer.
If any single customer is 20%+ of your revenue, expect a 15-25% discount on your valuation. If one customer is 40%+, some buyers won't even engage. This was consistent across every industry in the data.
3. Recurring revenue commands a 25-40% premium.
Businesses with subscription or contract-based revenue sell for significantly more than comparable businesses with transactional revenue. This showed up everywhere — not just SaaS. HVAC maintenance contracts, insurance renewal books, managed IT services, even landscaping maintenance contracts.
4. Your industry determines your valuation methodology — not just your multiple.
Dental practices are valued on a percentage of collections. Insurance agencies on a multiple of book. SaaS on ARR. Manufacturing on EBITDA. Restaurants on SDE. Applying the wrong framework gives you a meaningless number.
5. 2021 comps are dangerously misleading.
Multiples compressed 15-25% after the rate hikes. If you're using a comp from the ZIRP era to estimate your value in 2026, you're probably 20-30% too high.
6. Owner dependency is the #1 value killer nobody talks about.
If the business can't function without you for 90 days, the data shows a 20-40% discount. That's not a small number — on a $3M business, that's $600K-$1.2M.
Happy to answer any questions. This is literally what I do all day.