Why Your $10M Company Is Only Worth 3x EBITDA
Discover the capability gaps that suppress your valuation multiple—and what to do about them. If you've ever wondered why similar companies sell for vastly different multiples, this episode breaks it all down.
About This Episode
In this episode, we tackle one of the most common questions we hear from founders: "Why is my company only worth 3-4x EBITDA when I see headlines about companies selling for 10x or more?"
The answer lies in what we call "risk discounts"—specific capability gaps that buyers identify during due diligence that cause them to reduce their offer. These aren't arbitrary; they're predictable patterns that show up in virtually every middle-market transaction.
We'll walk through the four major risk factors that suppress multiples, explain how buyers quantify these risks, and most importantly, give you a practical roadmap for addressing them before you go to market.
Key Takeaways
- The specific capability gaps that trigger 'risk discounts' in buyer valuations
- Why customer concentration above 20% can cut your multiple by 1-2x
- How key person dependency is the #1 value destroyer in middle-market deals
- The difference between a 3x company and an 8x company (it's not revenue)
- Practical steps to address valuation risks before going to market
Episode Timestamps
What's Your Multiple Risk?
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