The multiple is a range, not a number
When owners ask what their business is worth, they want a single figure. The honest answer is a band. Two businesses with identical earnings can trade a full turn of EBITDA apart, and the gap between them is almost never the earnings. It is the risk a buyer reads into those earnings.
A 4.1x average is a real anchor for deals in the $1M to $5M EBITDA range, but averages hide the spread. The same $2M business can close at $6M or $9M. Where it lands is decided long before the negotiation, in what can and cannot be proven.
What pushes the multiple down
Owner dependency is the heaviest discount. If the business needs you in the building to function, a buyer is not purchasing an asset, they are purchasing a job with your name on it. Customer concentration is next: when three accounts carry half the revenue, the buyer prices the risk that one of them leaves. Messy books do quiet damage too, because a buyer who cannot verify a number simply refuses to pay for it.
What pushes it up
Documented systems, a management layer that runs the day-to-day, revenue spread across many customers, and verifiable lead flow all move the number the other way. Each one converts a story into evidence, and evidence is the only thing a buyer pays full price for.
This is why we start every engagement with a real valuation and a readiness diagnostic instead of a formula. The formula tells you the starting line. The preparation tells you the finish.