Valuation Multiples: What a Single Number Does Not Tell You
The multiple circulating among Swiss buyers, for a mid-sized industrial or B2B services SME, usually sits between five and eight times normalised EBITDA. That single figure, repeated from one article to the next, hides a fork most owners only discover once negotiations start: within that same range, two companies in the same sector and of comparable size can be offered multiples that differ by two full points, a price gap of several hundred thousand, sometimes several million francs. The question that matters is not what the sector multiple is, but where, inside that range, your company actually sits, and why.
Seven criteria that move the multiple
A buyer, financial or strategic, rarely builds an offer straight from the median multiple published in a sector study. They start from it, then adjust up or down against a handful of concrete criteria, summarised below without pretending to an exact formula.
| Criterion | Pushes the multiple up | Pushes the multiple down |
|---|---|---|
| Owner dependence | Autonomous management team, delegated decisions | The business stalls if the owner takes three weeks off |
| Revenue | Multi-year contracts, documented recurrence | One-off orders, order book rebuilt every year |
| Customers | Diversified base, no account above 15% of revenue | Two or three accounts carrying half of revenue |
| Size | EBITDA above CHF 2 to 3 million | Sub CHF 1 million EBITDA, fewer qualified buyers in the room |
| Growth | Steady trajectory over three to five years | Uneven revenue or a recent decline |
| Financial reporting | Restated accounts, reliable monthly reporting | Accounts that need heavy restatement in due diligence |
| Sector | Low cyclicality, real barriers to entry | Cyclical sector or one consolidated by large players |
These orders of magnitude vary by canton, sub-sector and the number of active buyers when the company goes to market; they point a direction, not a formula. One thing matters more than the rest: these criteria do not add up linearly. A company that ticks five of seven favourable boxes does not automatically capture five sevenths of the gap between the low and high end of the range. Owner dependence and revenue recurrence act more like thresholds than scores: below a certain level of team autonomy, a financial buyer simply walks away from the deal rather than offering a discounted multiple. A strategic buyer reads the same table differently again, since synergies with its own operations can outweigh a weak score on two or three criteria that would sink a purely financial offer.
What size and dependence actually change
Two criteria weigh more than the rest in practice. The first is owner dependence: an SME where every commercial and technical decision runs through one person worries a buyer well before they even open the accounts, because they are pricing the risk of value collapsing the day that person leaves. Documenting the key processes before going to market changes nothing in this year's figures, but it can move a company toward the top of the range, sometimes by a full point of multiple. The second is revenue recurrence: an order book rebuilt from scratch every year is structurally worth less than a base of multi-year contracts, even at identical revenue, because the buyer is paying for visibility they do not have to recreate themselves. Recurring revenue and documented contracts remain, on that basis, one of the few levers an owner can still pull in the two to three years before a sale.
What the deal structure changes
The multiple quoted in a letter of intent never stands alone either: its real value depends on how much is paid in cash at signing versus deferred. A buyer can quote a high multiple, seven times EBITDA say, while paying only half at closing and tying the rest to an earn-out over two or three years. Picture a precision engineering SME whose owner accepts a multiple of seven on paper, with 40% of the price contingent on margin targets they no longer control once they have left: a hypothetical case, not a client, but a pattern that recurs regularly in Swiss negotiations. A multiple of five paid entirely in cash can, in practice, be worth more to the seller than a multiple of seven largely deferred. The financing structure the buyer chooses, bank debt, seller loan or co-investor, directly determines how much of that quoted multiple actually reaches the seller's account, and when. Comparing two offers therefore means reducing each to its real present value, cash portion plus deferred portion weighted by the odds of it being paid, before being swayed by the bold figure printed in the letter of intent. A seller who negotiates the payment schedule as carefully as the headline number often ends up better off than one who accepted a higher multiple without asking when, and under what conditions, the last instalment actually lands.
Which multiple fits which company
An SME under CHF 1 million of EBITDA, dependent on its owner and on two or three customers, does well to anchor its expectations at the low end of the sector range, and to spend the two years before a sale working on the criteria that carry the most weight rather than on the multiple itself. A better documented company, with recurring revenue and a management team that can run without its founder for several weeks, can legitimately aim for the top of the range, and negotiate a larger cash portion since the risk the buyer perceives is already lower. Between these two profiles, the single figure printed in the business press is worth little more than a rough benchmark: what actually sets the final price is the criterion by criterion conversation that happens once the letter of intent is on the table.