What multiple do small businesses sell for in Canada?

Buyers and lenders both start from the same question: how much cash does this business actually generate for an owner-operator, and how safe is that cash stream. The multiple applied to that earnings figure is really a price on risk. Two businesses with identical revenue can sell for very different amounts once a buyer prices in customer concentration, owner dependence, contract terms, and the trend line of the last three years.

The multiple is applied to seller’s discretionary earnings for smaller owner-operated businesses, or EBITDA once a business is large enough to support a general manager. It is not applied to revenue, and it is not applied to net income before add-backs. A buyer paying a given multiple is really saying how many years of that adjusted earnings stream they are willing to pay for today, discounted for the risk that the stream does not continue after the sale.

• Earnings that are well documented, consistent, and trending up rather than flat or declining
• A management team or staff structure that can run the business without the owner present every day
• A diversified customer base with no single account representing an outsized share of revenue
• Contracts, licences, or recurring revenue that transfer cleanly to a new owner
• Clean, reviewed or audited financial statements rather than owner-recalled figures

• Heavy owner dependence, where relationships, know-how, or signing authority sit entirely with one person
• Concentrated customers or suppliers that could walk away under new ownership
• Declining or volatile revenue and thin, inconsistent record-keeping
• Leases, contracts, or licences that do not transfer, or that trigger on a change of control
• An industry or asset base facing structural decline or heavy upcoming capital spending

General industry commentary sometimes cites illustrative multiple ranges for certain sectors, and those figures are useful only as a rough starting orientation, never as a number to apply to a specific business. Published averages blend businesses of very different sizes, risk profiles, and regions into one figure, and the spread within any single sector is usually wide. Treating an average as a price ignores everything that actually determines what a specific buyer will pay for a specific set of financial statements.