An EBITDA multiple is the number a buyer applies to a firm's earnings before interest, taxes, depreciation, and amortization to arrive at a purchase price. If an engineering firm produces $1,000,000 of EBITDA and sells for $5,000,000, it sold at a 5 times EBITDA multiple. It is the most common shorthand for pricing architecture, engineering, and surveying firms.
Typical multiples for A/E/LS firms
A working rule of thumb for A/E and surveying firms is 5 to 6 times EBITDA, or 2 to 3 times Seller's Discretionary Earnings for smaller owner-operated practices where the owner's compensation dominates the income statement. Size, the type of work performed, and the durability of client relationships all push a specific firm above or below the range.
What moves the multiple up or down
Buyers and lenders pay for predictability. A deep bench of licensed professionals, a contracted backlog covering six to twelve months of revenue, and a diversified client base support the top of the range. Heavy client concentration, revenue that depends on the departing owner's stamp and relationships, and thin or undocumented backlog pull the multiple down faster than any other factors.
The bank checks the math
On every SBA-financed deal, the lender hires an independent third-party valuation firm, the same way a bank orders an appraisal before writing a mortgage. That valuation is built on historical cash flow, not projections; banks will not accept the discounted cash flow method. The price also has to survive the DSCR test, because a multiple the firm's cash flow cannot service is a price no bank will finance. That discipline protects buyers from overpaying and gives sellers a defensible number.
