Pricing Trends for Midsize, Large, and Platform ARM Companies

In the ARM industry, a midsize company has $5-20 million in annual revenues and is typically among the leading players in the market segment that it services.

Pricing is typically derived by a buyer applying a multiple to the seller’s adjusted EBITDA. In today’s competitive marketplace, with low interest rates and availability of capital, pricing typically falls in the range of 4-7 times seller’s annual adjusted EBITDA.

Higher amounts of cash tend to drive lower multiples for midsize businesses. A buyer may pay more cash in instances when the selling business has less reliance on the owner and employs key personnel who run the business and maintain relationships with key clients. Higher multiples and more cash are also paid to owners of companies with a diverse client base in desirable market segments.

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