By: Leib Orlanski Esq., Eric Simonson, Esq., and James Guadiana, Esq.
European and other foreign acquirers have increasingly asked about U.S. valuation multiples for potential acquisition targets, as well as effective strategies for structuring acquisitions of U.S. companies.
This blog provides an overview of recent U.S. transaction valuation trends by industry category and highlights common structuring considerations from the perspective of Greenspoon Marder’s International M&A lawyers, providing unique insight into the key drivers influencing deal pricing and the factors foreign buyers should consider when entering the U.S. market.
Key EBITDA Multiples by Industry (2025–2026)
- Technology & Software (SaaS): 8x – 20x+ (driven by Annual Recurring Revenue growth and customer retention)
- Healthcare & Medical: 7x – 14x (driven by patient volume and reimbursement trends)
- Aerospace & Defense: 8x – 16x+ (supported by strong demand and defense spending)
- Financial Services: 6x – 12x (highly dependent on assets under management)
- Manufacturing: 5x – 10x (higher for specialized manufacturing, lower for commodity sectors)
- Professional Services/Consulting: 3x – 6x (often limited by key-person risk)
- Restaurants & Retail: 2x – 5x (dependent on brand strength and location)
Key Value Drivers Affecting Multiples
- Revenue Predictability: Recurring revenue models (Monthly Recurring Revenue / Annual Recurring Revenue) significantly increase valuation multiples.
- Size: Companies with higher EBITDA (e.g., over $10 million) typically command higher multiples due to reduced perceived risk.
In recent transactions, some U.S. sellers have sought valuations based on gross margin rather than EBITDA when deals include earnouts tied to future performance. Sellers argue that post-acquisition investments in SG&A by buyers may depress EBITDA during the earnout period.
Why High Gross Margin Does Not Guarantee High EBITDA
A company may maintain high gross margins while generating low or negative EBITDA due to reinvestment strategies or operational inefficiencies.
- Growth Strategy: SaaS companies (such as HubSpot) often maintain high gross margins (e.g., 80%+) but report lower EBITDA due to aggressive sales and marketing investments.
- Operational Overhead: Professional services businesses may see high gross margins offset by significant personnel and administrative costs.
- Scaling Inefficiencies: Low-margin businesses (e.g., grocery chains) can sometimes achieve stronger EBITDA performance through lean operational structures.
Key Strategic Insight
- Profitability Floor: Gross margin represents the ceiling for EBITDA. If gross margins are thin, there is limited flexibility to absorb cost increases or inefficiencies.
Greenspoon Marder’s Corporate Practice represents clients in domestic and cross-border transactions, offering strategic guidance on attracting U.S. businesses, mergers and acquisitions, as well as other complex business matters, across global markets.
International M&A Group
Leib Orlanski
Partner, Corporate
Greenspoon Marder LLP
Los Angeles, CA 90067
Office: 323-880-4539
Email: [email protected]
Eric Simonson
Partner, Corporate & Business
Greenspoon Marder LLP
New York, NY 10105
Office: (212) 524-5030
Email: [email protected]
James Guadiana
Partner, Tax
Greenspoon Marder LLP
New York, NY 10105
Office: (212) 524-5099
Email: [email protected]
This publication is provided by Greenspoon Marder LLP is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.
