What Is My Manufacturing Company Worth? SDE and EBITDA Multiples for 2026

Buyers price a manufacturing company as a multiple of earnings. Which earnings figure they use depends on whether the company runs without you. An owner-operated shop is priced on seller's discretionary earnings (SDE): net profit plus one owner's full compensation plus documented add-backs. A company that already has a general manager, a controller and production leadership is priced on EBITDA, which is SDE minus a market-rate salary for the manager who replaces you. If SDE is new to you, start with what seller discretionary earnings include.

The SDE multiple method

Owner-operated manufacturers are priced on an SDE multiple drawn from closed deals. These buyers fit a company this size: individuals financing with an SBA 7(a) loan and private strategic manufacturers. An SBA buyer's lender tests the price against historical cash flow, so the multiple that matters is the one a lender will finance, not the one an owner hopes for.

The EBITDA multiple method

The EBITDA multiple method applies when the buyer will pay a manager to run the plant and still needs a return on its capital. PE sponsors forming platforms or adding on, and private strategic manufacturers, price this way. Their multiples apply to EBITDA only. Putting an EBITDA multiple on SDE overstates value, because SDE still contains the salary the buyer will have to pay someone to replace you.

Assets set a floor, capex is a deduction

Machinery, inventory and owned real estate set a floor under value, and in an asset sale the price is allocated across those classes for tax. Equipment that needs replacing is a capital item. It comes off the price after the multiple is applied, never off earnings before it.

Before you compare your company to any multiple, recast your last two fiscal years into SDE, and into EBITDA if you have a general manager, because the buyer's lender tests the last fiscal year or a two-year average.

Owner-operated manufacturers sold at a median 2.75x SDE, according to BizBuySell's valuation benchmarks for manufacturing businesses sold from 2021 to 2025, with a lower quartile of 2.04x and an upper quartile of 3.59x. Each row below is its own quartile for that measure. A company with upper-quartile revenue did not necessarily sell at an upper-quartile multiple.

The five-year average in the same data is 3.00x, above the 2.75x median, so price yourself off the median and quartiles. Two other figures in the sold-business data cover a different window, Q3 2021 to Q2 2026: a 3.04x average earnings multiple for the sector and a $726,914 median sale price. Read those on their own, not against the quartiles.

Above the owner-operated market, a manufacturing business EBITDA multiple comes from PE deal data, and no free source publishes one for lower middle market manufacturers. The second table is sector context only. GF Data, per ACG's October 1, 2026 recap, put manufacturing at 7.1x TTM adjusted EBITDA in H1 2026, up from 6.7x in 2025, for PE-backed deals of $10M to $500M TEV. Capstone Partners' industrials and metals manufacturing reports supply the remaining rows.

Why 7.1x does not apply to an owner-operated shop

The 7.1x comes from PE-backed deals with at least $10M of enterprise value. Those companies have management teams, financials that hold up under a quality of earnings review, and buyers financing with institutional debt. A shop at a few hundred thousand dollars of SDE has a different buyer. That buyer's SBA lender caps acquisition debt at an independent valuation and requires 1.25x coverage on historical results. The bases also differ: 7.1x is applied to EBITDA, and the quartiles are applied to SDE, which is larger than EBITDA for the same company.

If your enterprise value would land well below the $10M floor of the PE sample, price your company off the SDE quartiles in the first table and treat 7.1x as a reference point for a larger exit later.

Five things move a manufacturer within the quartiles or out of them: customer concentration, backlog, equipment and capex, management depth, and certifications. No published source quantifies a discount for any of them in this industry. What follows is how a buyer tests each one in diligence.

Customer concentration

Customer concentration is one of the first schedules a buyer requests: revenue by customer for every year in the financials you present. When one customer carries a large share of sales, the buyer can lower the multiple, move part of the price into an earnout tied to that customer staying, or ask to meet the customer before closing. Buyers also read the paperwork. Revenue under a master supply agreement with no change-of-control termination is worth more than the same revenue from open purchase orders.

Backlog

Backlog is the buyer's evidence that revenue continues after you leave. A buyer separates firm purchase orders with delivery dates from blanket orders and customer forecasts, then checks the margin on that backlog against your historical margin. Backlog that shrinks between LOI and closing gives the buyer grounds to retrade the price, so keep quoting and booking work at full pace through the sale.

Equipment and capex

Buyers walk the floor with your asset list, maintenance logs and the age of every major machine. A machine at the end of its useful life is a capital item: the buyer prices its replacement and takes that amount off the purchase price, dollar for dollar. Your SDE does not change, because replacing a machine is not a recurring operating cost. The worked example below shows why that distinction matters. Build an equipment schedule with age, condition and replacement cost before you go to market, so the buyer's estimate is not the only one on the table.

Management depth

If you hold the key customer relationships and lead quoting and process engineering yourself, the buyer is paying for a company that depends on one person and will price it that way. Capstone's October 2026 metals manufacturing report says premium valuations are reserved for companies with differentiated capabilities, experienced management and executable growth plans. A plant manager, an estimator and a quality lead who already run the floor can move your company from an SDE buyer pool to an EBITDA buyer pool.

Certifications

Certifications are a capability a buyer cannot add quickly. The same October 2026 report points to sponsor-backed precision platforms such as PrecisionX that hold ISO quality management certification, aerospace quality certification and ITAR registration.

End markets

The same report names exposure to infrastructure, data center, power generation and defense end markets as a driver of buyer interest. A customer list weighted toward those markets is worth showing early in a blind profile.

Before you market the company, build a single schedule showing revenue by customer, backlog by type, equipment age and certifications held, because a manufacturing buyer will ask for each one in the first round of diligence.

A manufacturer with $1,500,000 of revenue and $400,000 of SDE is worth $816,000 to $1,436,000 on the sold-business quartiles, and $1,100,000 at the median. Both its revenue and its SDE fall inside the middle half of sold manufacturers, so the SDE quartiles describe this company. Every figure in this example is SDE times an SDE multiple.

Where the equipment deduction goes

Now suppose the buyer's equipment walk finds a machine that needs replacing, which we will call $100,000 for illustration. The correct treatment applies the multiple to the full $400,000 of SDE and then subtracts the replacement cost from the price. The incorrect treatment cuts SDE to $300,000 and multiplies the loss.

Treating the machine as an earnings problem costs the seller $175,000 ($1,000,000 minus $825,000). If a buyer's LOI cuts your SDE for capex, that is the line to push back on.

The EBITDA market: $1,600,000 of EBITDA

A second company has $6,000,000 of revenue and $1,600,000 of EBITDA after paying a $150,000 general manager. Its SDE is $1,750,000 ($1,600,000 plus $150,000), far above the $500,000 upper-quartile SDE in the sold-business data, so the SDE quartiles do not describe it. No free source publishes a lower middle market EBITDA multiple for manufacturing. As a reference only, the PE sector figures give $11,360,000 at 7.1x EBITDA and $10,720,000 at 6.7x EBITDA. Both sit just above the $10M floor of that PE sample, which tells you a sponsor could underwrite this company, not what it will offer. At a business purchase price of $3,000,000 or more, an SBA lender also requires a quality of earnings report, and the lender uses its normalized earnings in the coverage test.

Run your own numbers the same way: SDE from your last fiscal year, the 2.04x, 2.75x and 3.59x quartiles, then subtract the capital items a buyer's equipment walk will find.

A headline price is split into cash at close, seller financing, any earnout and, with PE buyers, rollover equity. Each piece carries different risk for you. The SBA rules decide how much of a smaller deal can be cash on day one.

Cash at close when the buyer uses an SBA loan

A 7(a) loan tops out at $5,000,000. Under SOP 50 10 8.1, in force since October 1, 2026, a complete change of ownership needs an equity injection of 10% of total project cost, and up to half of it may be a seller note on full standby, although for a Business Expansion (an existing same-industry business buying another) the lender may reduce or waive the 10% on a documented finding of sufficient liquidity. A common split is 5% buyer cash plus a 5% standby note. On the $1,100,000 example with no other project costs, 10% is $110,000. A standby note pays no principal or interest for the life of the 7(a) loan. Interest can accrue, and the note amortizes only after the SBA loan is paid in full. The acquisition portion of that loan amortizes over up to 10 years.

Under SOP 50 10 8.1, an individual buyer's acquisition (an Initial Acquisition) or an Owner Buyout needs at least 1.25x debt service coverage, measured as EBITDA divided by post-closing debt service on the last fiscal year or a two-year average. An existing business buying another in the same industry group (a Business Expansion) needs 1.15x. Projections cannot be used to meet it. Standby seller debt is left out of debt service. Test your price in the SBA 7(a) loan calculator before you accept an LOI.

When the business purchase price is above $350,000, the lender must order an independent valuation from a Qualified Source, prepared for the lender. Total acquisition debt, meaning the SBA loan plus any seller note not on full standby, cannot exceed that valuation. Any price above it has to come from buyer equity or standby debt. For FY 2027 the SBA charges a 0% upfront guarantee fee on loans of $700,000 or less to manufacturers (NAICS 31-33), which lowers your buyer's closing costs.

Seller notes that are paid currently

A seller note that is not on standby gets paid on schedule, but it counts in the coverage test and against the valuation cap. Under 8.1 such a note must be in place and paid as agreed for 36 months before the buyer can refinance it with SBA debt.

Earnouts

An earnout ties part of the price to results after closing, such as a key customer staying or backlog converting to revenue. Define the metric, the measurement period and who controls the accounting in the purchase agreement, because you no longer run the books once the deal closes.

Rollover equity with PE buyers

PE platforms buying manufacturers can ask you to keep a stake in the combined company. 2026 examples include Banner Capital's agreement to acquire Seaway Plastics Engineering, MME Group and Wright Engineered Plastics, AFM Capital's purchase of Incodema3D, MCM Capital Partners' acquisition of Octex, and LFM Capital adding PowerBuilt to its industrial automation platform. Capstone's annual industrials report puts financial sponsors at 47.6% of 2025 middle market industrials deals, a record share. The manufacturing buyer guide covers which buyer group fits which company size.

What reaches you at closing

Cash at close equals the headline price minus the standby note, any earnout, any rollover, any working capital adjustment and debt you pay off. No published source measures that share for manufacturing deals, so compute it offer by offer. If your company matches one of Munera's active buyer clients, the buyer pays Munera's fee. If we run a confidential buyer search, the fee is a success fee paid at closing with no monthly retainer, and the $5,000 engagement deposit is credited against it. LOI to close runs 60 to 90 days, depending on financing and diligence.

When you hold two offers, rebuild each one into cash at close, standby note, earnout and rollover before you compare headline prices, because only the cash line is certain on the closing date.