Practical guide for business owners who want to know what their company is worth before selling. EBITDA multiples by sector, factors that increase or decrease value, emotional valuation traps, and when to get a professional valuation.
There is a question every business owner asks sooner or later: how much is my company worth? It is a seemingly simple question that conceals enormous complexity. The value of a company is not an objective number that can be calculated with a formula — it is a range that depends on the buyer, the context, and factors that go far beyond the financial statements.
At Blue Mountain we have been buying companies in the Spanish middle market for over fifteen years. This guide distils what we have learned for the business owner asking that question for the first time — or who suspects the answer they have been given is not entirely correct.
The vast majority of transactions in the Spanish middle market are negotiated on the basis of an EBITDA multiple. EBITDA — earnings before interest, taxes, depreciation, and amortisation — is the most widely used indicator because it reflects a company’s operating cash-generation capacity, regardless of its financial and tax structure.
But not just any EBITDA will do. What matters is normalised EBITDA: the figure that results from adjusting accounting numbers to eliminate items that distort recurring profitability.
The most common adjustments include:
An accounting EBITDA of €800,000 can become a normalised EBITDA of €1.2 million after proper adjustments. Or the reverse: an apparent EBITDA of €1.5 million can fall to €900,000 once non-recurring income is stripped out.
Once you have normalised EBITDA, the next step is to apply a valuation multiple. These are the typical ranges in the Spanish middle market for companies with normalised EBITDA between €1 million and €5 million:
| Sector | EBITDA multiple |
|---|---|
| Manufacturing | 4.5x – 6.5x |
| Distribution and logistics | 4x – 6x |
| Professional services | 5x – 7x |
| Technology and software | 6x – 10x |
| Food and beverage | 5x – 7x |
| Construction and infrastructure | 3.5x – 5.5x |
| Hospitality and catering | 4x – 6x |
| Healthcare and pharma | 6x – 8x |
| Energy and environment | 5x – 7.5x |
| Engineering and industrial services | 5x – 7x |
These ranges are indicative. Within each sector, a specific company’s position in the range depends on qualitative factors we analyse below.
Not all companies with the same EBITDA are worth the same. These are the factors that consistently push the multiple towards the upper end of the range:
Sustained growth. A company that has grown 8-12% annually over the past five years is worth more than one that has been flat, even if both have the same current EBITDA. The buyer pays for the trend, not just the snapshot.
Client diversification. If no client represents more than 10% of revenue, the risk is lower and the multiple rises. If a single client accounts for 40%, the buyer will apply a significant discount.
Autonomous management team. If the company runs without the founder’s daily presence, it is worth more. If the founder is the commercial director, CFO, and operations director rolled into one, it is worth less — because their departure creates enormous operational risk.
Recurring contracts. Recurring or contractual revenue (subscriptions, maintenance contracts, framework agreements) is more valuable than one-off project income.
Above-sector margins. Margins consistently above the sector average indicate real competitive advantages.
Intangible assets. Recognised brand, patents, proprietary know-how, specific certifications, institutional relationships.
Founder dependence. This is the most frequent and most costly negative factor in the Spanish middle market. If the founder takes key relationships, technical knowledge, and decision-making capacity with them, the company is worth less than the numbers suggest.
Client concentration. A single client representing more than 25% of revenue is a red flag for any buyer.
Hidden contingencies. Pending litigation, regulatory issues, undeclared tax liabilities, unfavourable long-term contracts.
Unreliable financial information. Companies without audited accounts, those that mix personal and business expenses, or those with disorganised accounting suffer an automatic discount.
Declining sector. If the sector has structural — not cyclical, but structural — negative trends, the multiple compresses.
High maintenance capex. If the company needs to invest heavily each year just to maintain its current position, the available free cash is lower than EBITDA suggests.
In our experience, the greatest obstacle to a realistic valuation is not technical but emotional. The business owner has spent decades building their company and tends to value it not by what it is worth to a buyer, but by what it means to them.
The sunk cost trap. “I have invested €5 million in this factory, so it is worth at least €5 million.” The buyer does not pay for what it cost to build the company but for what it will generate in the future.
The neighbour trap. “The competitor in the next province sold for 8 times EBITDA.” Every deal is different. Without knowing the exact conditions — price structure, earn-outs, warranties — comparing headline multiples is misleading.
The potential trap. “If someone invested €2 million in digitalisation, this company would double its revenue.” The buyer does not pay for theoretical potential; they pay for current reality and discount the risk of executing that investment.
The revenue trap. “We turn over €20 million, so my company is worth at least €20 million.” Revenue is irrelevant if margins are low. What matters is profitability.
The indispensable employee trap. Believing oneself indispensable is human, but in a valuation it works against the seller: the more indispensable the founder, the greater the risk and the lower the multiple.
You do not always need a formal valuation. If you simply want a rough idea, multiply your normalised EBITDA by your sector’s multiple range and you will have a reasonable interval.
But you need a professional business valuation when:
A professional valuation is not a simple multiple calculation. It includes an exhaustive analysis of financial statements, EBITDA normalisation, a market and competitor study, the application of multiple valuation methods (multiples, discounted cash flow, adjusted net assets), and the issuance of a report that carries credibility with buyers, banks, and the tax authorities.
At Blue Mountain Capital we are a family office investing patient capital in the Spanish middle market. When we evaluate a company, we follow a process that goes beyond multiples.
First, we normalise EBITDA rigorously. We do not accept the adjustments presented by the seller without verification. We request three to five years of financial statements, analyse them line by line, and build our own normalised EBITDA.
Second, we evaluate qualitative factors with the same depth as quantitative ones. The management team, competitive position, client dependency, asset quality, regulatory risk, sector trends.
Third, we build a cash flow model reflecting our operational vision: what we can improve, what investments we need to make, what synergies exist with our portfolio.
The result is not a single number but a value range reflecting different scenarios. Within that range, the final price is determined in negotiation, where the deal structure, warranties, potential earn-outs, and seller retention conditions come into play.
If you are reading this, you probably want to do something with this information. Here are five concrete steps:
Calculate your normalised EBITDA. Start from the accounting EBITDA of the last three years and make the adjustments we have described. Be honest: inflated adjustments are detected in due diligence.
Identify your multiple range. Use the table above as a starting point and adjust for your company’s qualitative factors.
Do an honest self-assessment. Which value-enhancing factors apply to your company? Which discount factors? Do not deceive yourself.
Talk to someone who buys companies. Not an adviser who wants to sell you a service, but a real buyer. An exploratory conversation with an experienced investor will give you more information than any report.
If you are serious, commission a professional valuation. The cost is minimal compared to the risk of negotiating poorly because you did not know the real value.
Your company’s value is not static. Every decision you make today — hiring a general manager, diversifying your client portfolio, formalising processes — can increase the value for the day you decide to sell. The best strategy is not to value and sell, but to value, improve, and then sell. Owners who start preparing their company three to five years before the sale consistently achieve higher multiples than those who sell unexpectedly.
If you would like a confidential conversation about your company’s value, contact us. There is no commitment and no cost. Just a direct conversation between business people.
See also: Company valuation methods, How to sell a company in Spain: essential guide, EBITDA: usefulness and limitations.
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
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