Multiples in Restoration M&A: What Owners Need to Know

Restoration Business Valuation Insight

Ask around in the industry and you’ll hear the same shorthand: “Restoration companies sell for [insert whatever you've heard from a friend or through the grapevine]x EBITDA.” We've heard a wide range of expectations and perspectives from owners on discovery calls. We've had the "I heard XYZ company sold for 16x" conversation and had to bluntly re-align expectations. In every headline number you see or hear about, context matters, and the details of the business matter even more. Multiples aren’t fixed rules of thumb, they’re the end result of how buyers view your business, your risk profile, and your cash flow.

If you’re serious about selling or even just planning ahead, you need to understand what those multiples actually mean and how they’re really determined.

What “Multiple of EBITDA” Really Means

At its core, a multiple is just a way of expressing how much a buyer is willing to pay for your company’s earnings. EBITDA is a commonly used metric as a proxy for cash flow or a company's earnings, excluding its the impact of capital structure and fixed asset base (these can be heavily impacted by management decision-making). We can get deeper into how meaningful EBITDA is vs other financial metrics (topic for another day), but it is a widely used benchmark for valuation and a comparison tool across multiple entities. Some insights:

• If your adjusted EBITDA is $2M and the deal closes at 5x, the implied enterprise value is $10M.

• But what gets overlooked is that EBITDA isn’t a static financial number. It’s commonly adjusted for owner compensation, non-recurring expenses, one-time expenses, and other situation specific add-backs that have to be defensible under diligence.

  
  

That’s why two companies with the same headline EBITDA can have very different valuations.

What Actually Drives Multiples in Restoration

Multiples expand or contract based on the perceived risk and quality of earnings. Here’s what buyers really focus on:

• Revenue Mix - Mitigation revenue and recurring program work can be valued more than company's that are reconstruction heavy or storm-dependent businesses.

• EBITDA Quality - Are margins consistent? Are add-backs clean and supportable? How strong is your cash conversion rate? How repeatable are your earnings?

• Customer Concentration - Heavy reliance on one carrier, TPA, or large client drags multiples down.

• Management & Systems - A business that has proper organizational infrastructure, capable management, systems in place, and repeatable processes command premiums.

• Growth Potential - Buyers pay up for a clear path to scale: expanded presence in current market, new geographies, service lines, or acquisitions.

• Asset Reinvestment - Have you kept equipment and vehicles current, or is a buyer staring at big capex after close?

  
  

These factors shift valuation by one, two, sometimes three full turns, which can mean millions of dollars in outcome.

Why “Rules of Thumb” Mislead Owners

When someone says, “Businesses sell for 5x,” what they’re really describing is an average. Some restoration firms sell for 2-3x, others for 7x or considerably more.

We’ve seen two companies of similar size sell at vastly different multiples simply because one had:

• Clean financials and job data, diversified revenue, and a capable management team → premium outcome.

• Messy books, large-project dependency, and no documented SOPs or any formal operating structure in place → steep discount.

Same revenue. Same industry. Very different valuations.

The Deal

Multiples aren’t rules. They’re outputs of buyer perception, business quality, and market conditions.

If you want to know where your restoration business really stands, you need a market-driven valuation that looks beyond the headline numbers and reflects what buyers will actually pay for your business.

At Restoration Business Advisors, we don’t throw around generic multiples. We analyze your business from the bottom up and the top down to deliver a valuation that’s realistic, defensible, and actionable. We give you the clarity and insight you need to make confident decisions.