For business owners, the takeaway is not that values have collapsed, but that buyers are placing greater emphasis on earnings quality, margin durability, and operational clarity when determining price.
Valuation Multiples Show Stabilization, Not Decline
Median EBITDA multiples for private companies edged lower in the fourth quarter of 2025, settling near 3.5x after recovering steadily from the lows of 2022. While this represents a pullback from the peaks seen in mid-2024, multiples remain within a historically consistent range when viewed over a multi-year period.
Importantly, this moderation reflects normalization rather than reduced buyer interest. Deal activity continues, particularly for businesses demonstrating consistent earnings and defensible market positions.
Profitability Is Becoming a Stronger Divider
EBITDA margins rebounded in late 2025 after midyear compression, with median margins returning to approximately 16 percent. While margins vary significantly by size and industry, the data shows a clear pattern: businesses with stable or improving margins are better positioned to sustain valuation levels.
Smaller and mid-sized companies showed relative resilience, while businesses with more than $10 million in revenue experienced greater margin pressure. Buyers are increasingly sensitive to cost structures, pricing discipline, and the sustainability of profits under changing economic conditions.
Sector Performance Remains Uneven
Valuation outcomes continue to vary widely by industry. Information-based businesses and utilities command some of the highest EBITDA multiples over time, while sectors such as accommodation, food service, and other labor-intensive industries trade at more conservative levels.
Professional services and healthcare-related businesses showed relative strength in 2025, supported by recurring demand and defensible revenue models. Manufacturing and larger revenue businesses, by contrast, faced greater multiple compression tied to margin pressure and capital intensity.
Deal Structure and Buyer Type Matter More Than Ever
The data also highlights meaningful differences by buyer type. Public buyers continue to pay higher multiples than private buyers, reflecting strategic synergies and long-term growth objectives. Private-buyer transactions, which represent the majority of lower middle-market deals, showed steadier but more conservative pricing.
For sellers, this reinforces the importance of positioning. How a business is presented, the quality of financial reporting, and the ability to support diligence expectations can materially influence both valuation and deal terms.
What This Means for Business Owners
Across the DealStats data, one message is consistent. Markets move, but prepared businesses retain optionality. Owners who invest in clean financials, documented operations, and reduced owner dependence are better positioned to navigate valuation shifts and attract serious buyers.
At Business Exits, we see these dynamics play out in real transactions. Valuation is no longer driven by timing alone. It is driven by preparation, clarity, and execution.
Source: DealStats Value Index Q1’26
For owners who want to understand how current market data applies to their specific business, obtaining a confidential valuation can be a practical first step in planning an eventual exit and evaluating available options. To learn more or to schedule a conversation with our team, visit
https://businessexits.com/page-y/.