EBITDA multiplevsRevenue multiple
Two ways to translate a company's size into an enterprise value. EBITDA multiple prices profitability; revenue multiple prices growth and market potential.
The one-sentence difference
EBITDA multiple applies to businesses valued on their current profitability. Revenue multiple applies to businesses whose growth trajectory makes profitability temporarily beside the point (early-stage SaaS, VC-scale technology).
Side-by-side
| Dimension | EV / EBITDA | EV / Revenue |
|---|---|---|
| What it prices | Profitability | Growth and market potential |
| Typical business type | Mature, profitable, cash-generating | High-growth, often not yet profitable |
| Home-services use | Every home-services transaction | Rarely used |
| SaaS use | Mature/enterprise SaaS | Growth-stage SaaS (Rule of 40) |
| Range in home services | 4–13× | 0.5–2× — not commonly reported |
| Range in SaaS | 10–25× | 3–15× ARR |
| Assumes | Current EBITDA is representative and sustainable | Growth will convert to future profitability |
| Manipulation vector | EBITDA add-back inflation | Revenue timing / revenue recognition aggression |
When to use which
Any business that generates real profit today. In home services, healthcare services, industrial services, and mature-B2B software, EBITDA multiple is essentially always the reference metric.
Full article on EBITDA multiple →Businesses growing 30%+ annually where profit is being reinvested. Early-stage SaaS, marketplaces, high-growth consumer technology. Rare in Main Street or lower-middle-market services.
Full article on Revenue multiple →What they have in common
Both are ratios of enterprise value to a size metric. Both require careful normalization (add-backs on EBITDA; revenue quality / classification on revenue). Both are calibrated to comparable-company or precedent-transaction benchmarks.
Frequently asked
Which multiple should I use for my business?
If your business generates positive EBITDA and grows in the single-to-mid double digits, use EBITDA multiple. If you're growing 40%+ and reinvesting all profit into growth, revenue multiple may be defensible — but this is rare outside VC-scale technology.
Can the same business use both?
Yes, as a cross-check. If EBITDA multiple implies $30M and revenue multiple implies $80M, that's a signal your growth assumptions are unusually aggressive relative to current profitability.