Two businesses with nearly identical revenue and profitability can sell for meaningfully different multiples. The gap almost never comes down to one dramatic factor. It comes down to a handful of things buyers scrutinize closely, most of which have nothing to do with how good the business actually is.
The Range Is Wider Than Most Owners Expect
Crassus works almost exclusively with businesses in the $3 million to $20 million EBITDA range, and the multiple data that actually applies here looks different from the broad "middle market" averages that get quoted most often. GF Data, which aggregates real, closed transaction data contributed by dozens of private equity firms, reported that deals in the $10 million to $25 million enterprise value band, the closest published range to where most of our clients fall, averaged 5.9x EBITDA, well below the 10.0x average for $100 million to $250 million transactions and the 7.3x reported across the broader PE-backed deal universe in the first quarter of 2026. That gap is part of the same buildup in private equity dry powder and falling long-term rates we've covered separately, which has lifted multiples across the board, but it hasn't erased the size premium buyers pay for scale. Below roughly $10 million in enterprise value, published data gets thinner still. Pricing at that end of the market is driven less by industry-wide surveys and more by how well a specific business and a specific buyer are matched, which is exactly where a smaller number of sizeable factors end up mattering more, not less.
What Pushes Multiples Higher
Predictable revenue is, of everything on this list, probably the single most powerful lever on a multiple. Contracted or recurring revenue is often worth a full turn or two of EBITDA on its own, in nearly any industry, because a dollar a buyer can count on next year is simply worth more than a dollar they have to re-win.
Depth in the management team matters almost as much. Buyers price in the risk of what happens if the person running the business today is no longer involved, and a company with genuine bench strength below the owner carries a fundamentally different risk profile than one where all the institutional knowledge sits in a single person's head.
Beyond that, a defensible position in a growing end market helps. Above-average growth, a differentiated offering, and a market that isn't shrinking all support a stronger multiple, particularly when a buyer can underwrite a credible case for continued growth after closing.
What Quietly Drags Multiples Down
These are the issues we see most often in the lower middle market, not because the businesses are poorly run, but because most owners have never had a reason to think about their company the way a sophisticated buyer will.
- Customer concentration. A single customer representing an outsized share of revenue is one of the few factors that can override an otherwise strong set of financials. Most buyers treat concentration above roughly 50% in one customer as a serious risk, not a minor caveat, and it shows up directly in the price.
- Financials that weren't prepared with a sale in mind. There's a real difference between financials that are technically accurate and financials that will survive a buyer's diligence process. Statements that haven't been prepared or reviewed by an experienced CPA, with commingled personal and business expenses, inconsistent categorization, or unclear add-backs, don't just slow a deal down. They actively erode a buyer's confidence in the earnings number the entire valuation is built on.
- Outdated or fragmented systems and technology. A business still running on spreadsheets, disconnected point solutions, or no real system of record raises real questions for a buyer about scalability, data integrity, and how much work it will take to integrate the business after close. It's rarely disqualifying on its own, but it consistently shows up as a discount in negotiations.
- Thin or inconsistent quality of earnings. The question buyers ask today isn't whether an EBITDA add-back can be argued. It's whether it can survive independent verification. The more a business's true earnings power depends on adjustments a buyer has to take on faith, the more skeptically it gets priced.
What Owners Don't See From the Inside
Most of what separates a premium outcome from an average one isn't visible from the inside. Owners run their businesses well and assume that's what gets reflected in a sale price. But a valuation is really a buyer's judgment about risk, and risk shows up in places an owner rarely has reason to look until someone is already asking hard questions in diligence. By the time those questions surface in a live process, there's often very little time left to fix what's driving them.
Sources: GF Data, Q1 2026 M&A Report (published in partnership with ACG, the Association for Corporate Growth); Bain & Company, Global Private Equity Report 2026. Multiples cited reflect the $10 million to $25 million enterprise value band, the closest published range to the lower middle market, and will vary by sector, deal size, and individual business characteristics.