Business multiples can be used to give an owner or potential a back of the napkin estimate on a company’s value in the absence of a business valuation report; the two most common multiples are based on revenue and cash flow. Price-to-Sales (P/S) ratios can be used for revenue multiples across industries based on company stock values. Industry sectors, business lifecycle, geography, macroeconomic factors and other variables will skew multiples so take them with a grain of salt for your own privately-held business. Cash flow multiples are derived from EBITDA and SDE (explanation below) which require owners to calculate accurate earnings and then leverage industry multiples.
Checkout research from NYU Stern School of Business for revenue multiples across more than 100 industry sectors and for more in-depth reading alternative multiples, the team at CFI has a comprehensive guide.