What BC Business Owners Get Wrong About Valuation Multiples
A sell-side broker's take on what the numbers actually mean when it's time to go to market.
I talk to business owners every week who want to sell. And within the first ten minutes, most of them say something like: "I heard businesses like mine sell for four times earnings." Sometimes they're right. More often, they're not. The gap between what a founder thinks their business is worth and what a buyer will actually pay comes down to one thing: understanding how valuation multiples work in the real world.
Rajeev Kumar and the team at ARV Consultants recently published an excellent breakdown of valuation multiples across BC industries, drawn from 2024 to 2026 transaction data. It's one of the better public references I've seen for the BC market, and I'd encourage anyone thinking about a sale to read the full piece. What I want to do here is add the broker's lens. The multiples are the starting point. What actually determines where your business lands within the range is the part most owners don't think about until it's too late.
The Ranges Are Wide for a Reason
ARV's data shows that a residential construction company in BC might trade anywhere from 2.5x to 4.5x EBITDA. A SaaS company could be anywhere from 3x to 6x. Retail sits as low as 1.5x on the bottom end. Those are massive spreads. On a business earning $1M in EBITDA, the difference between a 2.5x and a 4.5x multiple is $2 million in enterprise value. That's not a rounding error. That's a life-changing number for the founder on the other side of the table.
The reason the ranges are wide is that no two businesses are the same. The multiple reflects a buyer's assessment of risk, transferability, and earnings quality. Two businesses in the same industry, with the same top-line revenue and the same reported EBITDA, can receive dramatically different offers.
Where BC Businesses Typically Land
Here's a condensed look at median valuation ranges across key BC sectors, adapted from ARV Consultants' 2026 research. These apply to privately held businesses in the $500K to $15M revenue range.
Source: Adapted from "Business Valuation Multiples by BC Industry (2026)" by Rajeev Kumar, Director at ARV Consultants.
| Industry | Multiple Type | Typical Range | Key Factor |
|---|---|---|---|
| Technology (SaaS) | EBITDA | 3.0x – 6.0x | Recurring revenue lifts the ceiling |
| Construction (residential) | EBITDA | 2.5x – 4.5x | Cyclical risk pulls it down |
| Construction (commercial) | EBITDA | 3.0x – 5.0x | Long-term contracts add value |
| Manufacturing (light) | EBITDA | 2.5x – 4.5x | Inventory and asset intensity matter |
| Professional services | Revenue | 0.7x – 1.8x | Owner dependency caps the multiple |
| Trucking & logistics | EBITDA | 2.5x – 4.5x | Essential services, but capital heavy |
| Healthcare (clinics) | EBITDA | 2.5x – 4.5x | Recession-resistant, regulatory risk |
| Tourism & hospitality | EBITDA | 2.0x – 4.0x | Seasonality and cyclicality weigh heavy |
| Retail (brick & mortar) | EBITDA | 1.5x – 3.5x | Essential goods outperform discretionary |
| E-commerce | EBITDA | 2.0x – 4.5x | Proprietary products move the needle |
What I See That the Tables Don't Show
Here's where the broker's experience changes the conversation. The table gives you a range. What determines where you actually land is the story your business tells a buyer. And most of that story is written years before the listing goes live.
Owner dependency is the biggest value killer I see. If you are the business, meaning you hold every key relationship, make every decision, and run every project, a buyer sees concentrated risk. It doesn't matter if your EBITDA is strong. A buyer is asking one question: what happens to this business if this person walks away? If the honest answer is "it suffers significantly," you're looking at the low end of the range. Every time.
Customer concentration is right behind it. When one client represents 30 percent or more of revenue, buyers discount the business heavily. They should. Losing that client post-close could crater the earnings the buyer just paid a multiple on. I've seen deals die over this issue alone, and I've seen sellers leave hundreds of thousands of dollars on the table because they didn't diversify their revenue base before going to market.
Clean financials are not optional. I've worked with businesses where the underlying operation was genuinely strong, but the books were a mess. Commingled expenses, inconsistent reporting, no clear separation between owner perks and business costs. A buyer's accountant and their lender will tear those statements apart during due diligence. And when they can't trust the numbers, they either walk away or discount the offer to account for the uncertainty. Three years of professionally prepared financial statements is the minimum. If you're two years out from a potential sale, get your house in order now.
A note on EBITDA vs. SDE: Most of the multiples above apply to EBITDA. But for owner-operated businesses under $3M in revenue, buyers often evaluate using SDE (seller's discretionary earnings), which adds the owner's salary and benefits back into the earnings figure. SDE multiples tend to run lower than EBITDA multiples because they reflect the additional risk of a smaller, more owner-dependent business. Know which metric applies to your situation before you start doing math on a napkin.
Two Businesses, Same EBITDA, Very Different Outcomes
This is something I walk founders through regularly because it makes the concept tangible.
Scenario A: A light manufacturing company in the Lower Mainland. $1.2M EBITDA. Diversified customer base with no single client above 12 percent of revenue. Strong operations manager who runs the floor. Owner spends roughly 15 hours a week on the business. Clean books, reviewed annually. Steady 10 percent growth over the past three years. Expected outcome: 4.0x to 4.5x EBITDA. Enterprise value around $4.8M to $5.4M.
Scenario B: Same industry, same EBITDA. But one customer accounts for 40 percent of revenue. The owner is the primary sales contact for every account. Financial statements are compiled internally and haven't been reviewed by an accountant. Growth has been flat for two years. Expected outcome: 2.5x to 3.0x EBITDA. Enterprise value around $3.0M to $3.6M.
That's a gap of nearly $2M on the same earnings. The difference isn't the industry, the product, or the revenue. It's the risk profile. And every one of those risk factors is something Scenario B could have addressed with 12 to 24 months of preparation.
The BC Market Right Now
A few things worth noting for founders thinking about timing. BC's strongest sectors for M&A activity heading into 2026 and 2027 include technology (particularly SaaS, clean tech, and anything AI-adjacent), healthcare services driven by the aging population, modular and manufactured housing responding to the chronic housing supply gap, and e-commerce businesses with proprietary products and BC-based fulfillment.
On the other side, traditional brick-and-mortar retail continues to face structural headwinds unless you're in essential goods. Tourism and hospitality are recovering but still trading below pre-2019 confidence levels from buyers. And resource-dependent manufacturing tied to lumber and mining services carries cyclical risk that buyers are pricing in cautiously.
One trend I see consistently in our deal flow: Lower Mainland businesses tend to attract a pricing premium over comparable operations elsewhere in the province. ARV's data confirms this as well, noting a 10 to 20 percent premium driven by access to talent, higher growth rates, and proximity to Pacific Rim trade routes.
What You Can Do About It
If you're 12 to 24 months out from a potential sale, the single highest-ROI move you can make is to work on the factors that drive your multiple up. Not revenue growth. Not a new product launch. The boring operational stuff that makes a buyer feel confident writing a cheque.
Reduce customer concentration so that no single client represents more than 15 percent of revenue. Build a management layer so the business functions without you for at least 30 days. Get your financials reviewed or audited by a professional accountant for a minimum of three consecutive years. Convert project-based or one-off revenue into recurring contracts, maintenance agreements, or subscription models wherever possible. And improve your gross margins through pricing adjustments, cost reduction, or trimming low-margin product lines.
None of this is glamorous. All of it directly impacts your enterprise value at closing.
The industry valuation multiples referenced in this post are adapted from "Business Valuation Multiples by BC Industry (2026)" by Rajeev Kumar, Director at ARV Consultants. Rajeev was named one of the world's Top 10 CFOs by CEO Insights Magazine in 2022, 2023, and 2024 and brings 18 years of experience advising BC businesses on valuation, exit planning, and financial strategy.
Thinking about selling your business in the next one to three years? The best time to start preparing is now. I work with founder-led businesses in Western Canada to get exit-ready and go to market at the right valuation.
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Jeff Zamluk — Founder, Swell Source Consulting. Sell-side M&A advisor for founder-led businesses in Western Canada ($2M to $20M enterprise value). 20+ years building, scaling, and exiting companies. Transactions execute through Chinook Business Advisory. swellsourceconsulting.com