The latest DealStats Value Index for Q3 2025 reveals several important trends that business owners, investors, and valuation professionals should understand.
EBITDA Multiples Show Strong Recovery
After experiencing volatility through 2022-2024, EBITDA multiples have shown encouraging growth in 2025. The median EBITDA multiple across all industries reached 3.8x in Q2 2025, up from 3.7x in Q1 2025 and representing a significant recovery from the 3.2x low point in Q3 2024.
This upward trend suggests increasing buyer confidence and improved market conditions for private company acquisitions. For business owners considering a sale, these rising multiples indicate a more favorable valuation environment compared to the depths of 2024.
Revenue Multiples Face Headwinds
While EBITDA multiples improved, net sales multiples declined in Q2 2025 to 0.57x, down from 0.6x in Q1 2025. This divergence between earnings-based and revenue-based multiples suggests that buyers are placing greater emphasis on profitability rather than top-line growth alone.
The decline from the 0.7x peak in Q4 2024 indicates that buyers have become more selective, focusing on companies that can demonstrate strong cash flow generation rather than just revenue growth.
Industry Sector Analysis: Winners and Laggards
High-Value Sectors
The Information sector continues to command the highest multiples, with an all-time median EBITDA multiple of 10.8x. This reflects the continued premium placed on technology and intellectual property-driven businesses. Utilities (8.2x) and Finance & Insurance (7.5x for all periods, but 10.9x for the last 12 months) also command significant premiums, indicating strong investor appetite for stable cash flows and regulated businesses.
Value Sectors
Accommodation and Food Services (2.6x) and Other Services (3.1x) show the lowest median EBITDA multiples, potentially offering opportunities for buyers seeking value investments or for sellers to consolidate fragmented markets.
Company Size Matters More Than Ever
The data reveals significant valuation premiums based on company size:
Companies with revenue above $10M achieved median EBITDA multiples of 6.1x in 2025 YTD
– $5M-$10M companies traded at 3.7x
– $1M-$5M companies saw 3.8x
– Sub-$1M companies achieved 4.0x
This size premium reflects the reduced execution risk and greater strategic value that larger companies offer to acquirers.
Market Structure: Public vs. Private Buyers
Public company buyers continue to pay substantial premiums over private buyers across all sectors. This “strategic premium” reflects:
– Synergy opportunities available to strategic acquirers
– Access to public market capital for larger deals
– The ability of public companies to issue stock as consideration
For business owners, this highlights the importance of marketing to both strategic and financial buyers to maximize valuation.
Profitability Trends
EBITDA margins have declined slightly to 15% in Q2 2025 from 16% in Q1 2025, but remain well above historical lows. This compression suggests:
– Increased competitive pressures in many sectors
– Rising labor and input costs affecting margins
– The importance of operational efficiency in maintaining profitability
What This Means for Business Owners
For Sellers:
– Time your exit carefully – Current EBITDA multiples are recovering but remain below 2024 peaks
– Focus on profitability – Buyers are prioritizing cash flow over revenue growth
– Consider strategic buyers – The premium for strategic acquisitions remains substantial
– Prepare for longer sales cycles – Median days to sell remained around 219 days in H2 2024
For Buyers:
– Revenue multiple opportunities – Declining revenue multiples may present value opportunities
– Industry selection – Consider value sectors with lower multiples but stable cash flows
– Size strategy – Larger companies command premiums, but smaller deals may offer better returns
Looking Ahead
The data suggests we’re in a transitional period where:
– Earnings quality matters more than growth – reflected in diverging EBITDA vs. revenue multiples
– Market conditions are stabilizing – evidenced by recovering EBITDA multiples
– Size and sector premiums persist – indicating continued market segmentation
For Central Pacific Valuation’s clients considering transactions in 2025, these trends underscore the importance of thorough market analysis and strategic positioning to achieve optimal outcomes.
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Source: DealStats Value Index Q3 2025, Business Valuation Resources. The DealStats database contains transaction data for acquired private companies and is updated quarterly.