California small-business valuations sit at the intersection of national multiples data, regional buyer-pool dynamics, industry-specific drivers, and individual deal characteristics (recurring revenue, customer concentration, owner dependence). This guide walks through the SDE and EBITDA multiples we see in active California transactions, segmented by industry and price tier.
The Two Multiples That Matter: SDE and EBITDA
SDE (seller's discretionary earnings) is used for owner-operator businesses under ~$1.5M in pre-tax cash flow. EBITDA is used for businesses with management beyond the owner. The transition typically happens around $750K–$1.5M EBITDA. Most California Main Street deals trade on SDE; lower-middle-market deals trade on EBITDA.
Service Trades (HVAC, Plumbing, Electrical)
Established California service trades typically trade at 2.5x–4.5x SDE for owner-operator businesses, 4.0x–6.0x EBITDA for managed operations. Multiples are driven by recurring service contract base, technician retention, brand strength, and review profile.
Dental and Medical Practices
California dental practices trade at 60–85% of trailing-twelve-month collections for general practice; 70–110% for specialty. Medical practices trade similarly but with payor-mix scrutiny. Multiples have compressed slightly as PE-backed consolidators have become more sophisticated underwriters.
Restaurants and Bars
California restaurants trade at 2.0x–3.5x SDE for established Main Street operations, with significant variance by concept (full-service vs counter, alcohol mix, lease quality). Bars and breweries trade higher (3.0x–4.5x SDE) when ABC license value is captured.
SaaS and Tech-Services
California SaaS businesses with $300K–$2M in ARR typically trade at 3x–6x ARR or 4x–8x EBITDA, with multiples driven by net retention, gross margin, and growth rate. Tech-services and agency businesses trade at 3x–5x EBITDA depending on recurring vs project mix.
Manufacturing and Distribution
California light manufacturing trades at 3x–5x EBITDA for owner-operator businesses, 4x–7x for managed operations. Specialty manufacturing with proprietary processes commands premium multiples.
Trucking and Logistics
California trucking and logistics businesses trade at 2.5x–4.5x SDE for asset-light operations, 3.5x–5.5x for asset-heavy. Inland Empire logistics operations command competitive bidding from national industrial PE.
What Drives Above-Range Multiples
Recurring revenue (contracts, subscriptions, retainers), low customer concentration (no customer >15% of revenue), defensible brand or location, transferable operations (not owner-dependent), clean books, and growing top line.
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