Pricing a business as a multiple of earnings means setting its value at some number of times a chosen earnings figure — SDE, EBITDA or a revenue proxy — with the multiple itself carrying the market’s judgment about growth, risk and owner-dependence.
Pricing a business as a multiple of earnings puts all of the market’s judgment about growth, risk and owner-dependence into a single number applied to an accounting output. Deavo’s valuation tool describes the method directly: SDE “× adjusted sector multiple = a low–high range”, with the multiple shifted by “growth trend, profit trend, years established, owner-dependence” (source), and publishes illustrative median SDE multiples by sector — 2.1× for restaurants, 2.9× for trades and services, 3.6× for manufacturing — labelled “illustrative medians for research context only”, not an appraisal.
The same dollar of earnings prices very differently depending which multiple convention and deal-size band it sits in. Deavo’s capital-stack data shows pricing running “multiple of SDE, often ~2–3×” on micro deals, “on EBITDA, often ~3–5×” in the $1M–$5M band, and enterprise value “typically ~6–8× EBITDA” at $5M–$30M (source). Converting an SDE-based multiple into an EBITDA-based one for the same business is, in deavo’s own words, “imprecise and should be treated as directional only” — the earnings base itself is built differently, so the multiples are not interchangeable.
Two targets each generate $500,000 of adjusted earnings. Target A is a $500,000-SDE trades business, priced at deavo’s published trades-sector median of 2.9× SDE: $1.45M. Target B generates the same $500,000 as EBITDA, with a market-wage general manager already running daily operations, priced at 6.5× EBITDA (within deavo’s sourced ~6–8× mid-market band): $3.25M. The same dollar figure produces more than double the price, because the multiple and the earnings base it is applied to are answering different questions about who runs the business the day after closing.
See also: Seller’s discretionary earnings (SDE) · Multiple arbitrage · EBITDA.
A 30-minute call is enough to tell you whether AI pays for itself here.
Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.
No pitch, no listings. One email as each measure is published.
