GoKawiilBusiness Valuation Multiples Reflect Risk Assessment, Not Just EBITDA Math, Entrepreneur Analysis Explains
An Entrepreneur opinion piece argues that business owners commonly misunderstand valuation, believing EBITDA multiplied by a market multiple fully determines their company's worth. In reality, the multiple itself is derived from buyers' judgments about risk, management quality, customer diversification and the durability of future cash flows, not a fixed industry number. Two companies with identical EBITDA can receive very different offers depending on how confident buyers are that those earnings will continue after a sale.