What Is an EBIT Multiple?
When M&A advisers or buyers talk about business value, they frequently use the term "EBIT multiple." The concept is straightforward:
Enterprise Value (EV) = Normalised EBIT × Industry Multiple
If a mechanical engineering firm achieves a normalised EBIT of CHF 500,000 and the market values that industry at a multiple of 6× — the enterprise value is CHF 3 million.
Simple enough. But the devil is in the detail: which multiple applies to your industry? And what exactly is "normalised EBIT"?
Current EBIT Multiples for Swiss SMEs (2025)
The following multiples are based on observed transactions in the Swiss and DACH market for SMEs with an EV of CHF 2–50M. The range indicates the typical spread — the actual multiple depends on company size, growth, margins, and other factors.
Technology & Services
| Industry | Multiple (Conservative–Optimistic) | Key Drivers |
|---|---|---|
| IT / Software (SaaS, licences) | 8–15× | Recurring revenue, scalability |
| IT / Software (project-based) | 5–9× | Project dependency, margin |
| Management Consulting | 4–7× | Owner dependency, staff retention |
| Marketing / Communications | 4–6× | Customer concentration, creative output |
| Fiduciary / Legal | 5–8× | Recurring mandates, regulatory moat |
Industry & Manufacturing
| Industry | Multiple (Conservative–Optimistic) | Key Drivers |
|---|---|---|
| Mechanical Engineering | 5–8× | Order backlog, IP |
| Metal Processing | 4–6× | Capital intensity, commodity exposure |
| Plastics / Chemicals | 5–7× | Specialisation, niche products |
| Pharma / Medtech | 8–14× | IP, regulatory barriers |
| Food & Beverages | 5–8× | Brand recognition, distribution |
| Textiles / Fashion | 3–5× | Fashion cycles, margin pressure |
Trade & Distribution
| Industry | Multiple (Conservative–Optimistic) | Key Drivers |
|---|---|---|
| Wholesale / Distribution | 4–6× | Customer loyalty, inventory turnover |
| Retail (bricks-and-mortar) | 3–5× | Location value, online pressure |
| E-Commerce | 5–10× | Growth rate, customer retention |
Construction & Trades
| Industry | Multiple (Conservative–Optimistic) | Key Drivers |
|---|---|---|
| General Contractor / Construction | 3–5× | Order pipeline, working capital |
| Building Services (HVAC) | 4–6× | Service revenue share, skilled staff |
| Landscaping / Garden | 4–6× | Recurring contracts |
| Cleaning / Facility Management | 4–6× | Long-term contracts |
Health & Social Services
| Industry | Multiple (Conservative–Optimistic) | Key Drivers |
|---|---|---|
| Medical / Dental Practice | 3–5× | Patient base, licence |
| Physiotherapy / Therapy | 3–5× | Staff retention, capacity |
| Education / Training | 4–7× | Accreditations, reputation |
| Care Home / Home Care | 5–8× | Regulation, subsidies |
Hospitality & Tourism
| Industry | Multiple (Conservative–Optimistic) | Key Drivers |
|---|---|---|
| Restaurant / Café | 2–4× | Location, concession |
| Hotel | 6–10× | Location, occupancy, lease structure |
| Catering / Events | 3–5× | Contract base, seasonality |
What Influences the Multiple Within an Industry?
Within the same industry, the multiple can vary by a factor of 2–3. The most important factors:
Upward (Multiple Increases)
Recurring revenue: Long-term contracts, subscriptions, and maintenance agreements are gold. A software company with 80% ARR (Annual Recurring Revenue) commands a higher multiple than one with 80% project-based revenue.
Low owner dependency: If the business runs without the owner — strong management team, documented processes — handover risk drops dramatically.
Growth trend: A business that has grown 10% per year over the past 3 years is valued higher than one with stagnant revenue.
Uniqueness / IP: Patents, proprietary software, strong local brand recognition — all create pricing power.
Diversified customer base: No single customer above 15–20% of revenue.
Downward (Multiple Decreases)
Owner dependency: The most common value destroyer. If 60% of client relationships run through the owner personally, this is directly reflected in the multiple.
Customer concentration: A key account representing 40% of revenue is a risk that buyers price in as a discount.
Margin pressure / declining EBIT trend: If margins have been falling for 3 years, buyers rightly ask: "Why?"
Small size: Below CHF 300,000 EBIT, multiples drop sharply — too few institutional buyers are interested, and the financing risk is too high.
Industries under structural pressure: Bricks-and-mortar retail, traditional travel agencies, print media — structural change is reflected in lower multiples.
What Is "Normalised EBIT"?
The EBIT in your accounts is often not the EBIT buyers use. It must be "normalised":
1. Owner Salary Adjustment
Do you pay yourself CHF 80,000, when a market-rate CEO would cost CHF 150,000? Then EBIT is adjusted down by CHF 70,000 — the buyer has to fund this gap.
Do you pay yourself CHF 250,000, when an external managing director would cost CHF 150,000? Then normalised EBIT increases by CHF 100,000.
2. One-Off Items
Extraordinary income (property gains, one-off grants) is removed. One-off costs (restructuring charges, legal provisions) are also stripped out.
3. Private Expenses
Company car used privately, housing through the company, private insurance — all normalised out of EBIT.
4. Non-Market Rent
Do you lease premises from yourself at a non-market rate? The difference to market rent is normalised.
Example Calculation
Starting position: - Revenue CHF 3.5M, industry: IT consulting - EBIT per accounts: CHF 280,000 - Owner salary: CHF 60,000 (market rate: CHF 160,000) → EBIT adjustment −CHF 100,000 - One-off property gain: CHF 40,000 → removed - Private vehicle: CHF 15,000 → removed
Normalised EBIT: CHF 280,000 − 100,000 − 40,000 − 15,000 = CHF 125,000
Valuation: CHF 125,000 × 5× (conservative) to 7× (optimistic) = CHF 625,000 – 875,000
Without normalisation, the starting EBIT of CHF 280,000 would have suggested CHF 1.4–2.0M — a significant overstatement that surfaces during the M&A process and erodes buyer trust.
The Size Premium: Why Larger Businesses Are Worth More
An often overlooked effect: larger SMEs command higher multiples than smaller ones — even within the same industry.
| EBIT Size | Typical Multiple Adjustment |
|---|---|
| Below CHF 200,000 | −1 to −2× |
| CHF 200,000–500,000 | Base |
| CHF 500,000–1M | +0.5 to +1× |
| Over CHF 1M | +1 to +2× |
Why? Larger businesses are easier to finance, more attractive to institutional buyers, and generally have a more robust management structure.
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