When an entrepreneur begins to consider selling their company, the question is almost always the same: how much is my SME worth?

The most common answer is a number obtained by applying a multiple to EBITDA. It is a useful reference point, but it is not the price.

The sale price of an SME does not coincide with a formula. It is the result of a broader analysis that takes into account risks, future prospects, and strategic fit with the buyer.

EBITDA and multiples: a starting point, not the destination

Market multiples allow comparisons between similar companies and provide a general indication of value. However:

• not all SMEs are comparable
• not all EBITDA figures are the same
• not all industries carry the same risk profile

A “normalized” EBITDA is already the outcome of adjustments and assumptions. Moreover, the multiple applied varies depending on the quality of the business and its long term sustainability.

Two companies with identical EBITDA can have very different sale prices.

The drivers that determine the real price

A buyer does not purchase the past, but the company’s ability to generate future results. For this reason, they focus on concrete factors that affect risk and growth.

Quality of revenue

It is not only about how much revenue is generated, but how it is generated:

• recurring versus one off revenues
• multi year contracts versus spot orders
• stability of demand

Predictable and recurring revenues reduce perceived risk and may justify higher multiples.

Customer concentration

If a significant portion of revenue depends on one or two customers, perceived risk increases.

Customer concentration directly affects the price because the loss of a key client could materially impact revenues.

Management continuity

An SME that is strongly tied to its founder presents an obvious issue: what happens after closing?

The presence of an autonomous and recognized management team:

• increases transferability of value
• reduces personal dependency
• strengthens the credibility of the business plan

Organizational continuity is one of the most relevant factors in price determination.

Required investments

A positive EBITDA is not sufficient if the business requires significant investments in the coming years to:

• renew equipment
• comply with regulations
• support growth

The buyer takes future capital requirements into account. If substantial investments are needed, the price will be adjusted accordingly.

Competitive positioning

Brand strength, distinctive capabilities, barriers to entry, and consolidated relationships with customers and suppliers influence the company’s ability to maintain margins over time.

Intangible assets, even if not fully reflected in the financial statements, play a decisive role in the negotiated price.

Why the same business can be worth more or less

Value is not absolute. It depends on the type of buyer.

An industrial buyer may recognize a higher price if they can:

• integrate structures and functions
• generate operational synergies
• expand market share

A financial investor, on the other hand, will primarily focus on:

• growth prospects
• cash generation
• potential exit opportunities

The same SME may therefore receive different valuations depending on who is assessing it.

The final price results from the alignment between the company’s characteristics and the strategic interest of the potential buyer.

How to build a defensible range

Determining a credible price means:

1. Conducting an in depth analysis of economic and organizational drivers
2. Assessing the real risks that will emerge during the review process
3. Understanding which categories of buyers may be interested

An unrealistic price slows down the process and weakens the negotiating position.

An excessively conservative price, on the other hand, risks transferring value without a real necessity.

The objective is not to identify a “right” number in absolute terms, but to build a coherent, sustainable, and defensible range during negotiations.

Conclusion

Calculating the sale price of an SME does not mean applying a multiple to EBITDA.

It means understanding:

• how solid the revenues are
• how transferable the organization is
• which investments are required
• which type of buyer can recognize greater value

Only by integrating these elements can a theoretical valuation be transformed into a price that is truly negotiable in the market.