Earnings / EBITDA Multiple

How It Works

The Earnings Multiple method values your startup by multiplying its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) by an industry-specific multiple derived from comparable M&A transactions. The formula is simply: Valuation = EBITDA × Industry Multiple. The multiple is sourced from European M&A data to ensure relevance. Adjustments can be made for growth rate, market position, and strategic value. This method gives an enterprise value that reflects what an acquirer might realistically pay.

When It's Useful

Use the Earnings Multiple method when your startup has reached profitability — typically Series B and beyond — and generates positive EBITDA. It is the standard valuation method for mature businesses and is how most M&A transactions are priced. It is particularly relevant when considering exit scenarios, as acquirers typically think in terms of EBITDA multiples. It is not suitable for pre-revenue or pre-profit startups, where other methods (Berkus, Scorecard, Revenue Multiple) are more appropriate.

European Context

European earnings multiples are drawn from continental M&A benchmarks rather than US transactions. According to Dealsuite 2025 data, European SaaS companies trade at approximately 22.0x EBITDA (compared to 30x in the US), Fintech at 18.0x, and Marketplace businesses at 15.0x. While geographic sensitivity is low (EBITDA multiples are more industry-driven than geography-driven), using European-sourced benchmarks prevents the common error of applying US M&A multiples to European companies. The lower multiples reflect the smaller European exit market and more conservative acquirer valuations.

Key Parameters

Example

A Series B European SaaS startup generates EUR 2M annual EBITDA. Using the European SaaS multiple of 22.0x: Valuation = EUR 2M × 22.0 = EUR 44,000,000. If the startup had used a US-based multiple of 30x, the valuation would be EUR 60M — a 36% overestimate that would mislead both founders and investors.