How much is a business with €1 million turnover worth?
How much is a business with €1 million turnover worth?
A business with €1 million turnover has no fixed value: it depends on the sector, its profitability and the characteristics of the business, and two businesses with the same turnover can be worth very different amounts. Turnover alone does not determine value: what matters is how much profit the business generates and how sustainable that profit is over time.
It is a very common question among business owners. And the answer always starts with the same clarification: the value of a business is not calculated from its turnover but from its profit — measured either as EBITDA or as SDE.
Why doesn't turnover determine value?
Turnover is a reference figure, not a measure of value. Two businesses with €1 million turnover can have radically different values (illustrative examples):
- Business A: Turnover of €1M, EBITDA of €200,000 (a 20% margin), recurring revenue and low dependence on the owner. Estimated value: €700,000 – €1,100,000.
- Business B: Turnover of €1M, EBITDA of €80,000 (an 8% margin), high dependence on the owner and a single customer accounting for 40% of revenue. Estimated value: €200,000 – €360,000.
The difference is enormous — and it all comes down to profitability and the quality of those earnings.
Which methods are used to value a business of this size?
For businesses with a turnover between €500,000 and €1,500,000, two methods based on market multiples are mainly used.
EBITDA × Multiple method
EBITDA (earnings before interest, taxes, depreciation and amortisation) is the preferred metric when the business has a management structure that does not depend exclusively on the owner. EBITDA multiples for businesses of this size usually range between 2.5× and 6.0× in the sectors in the table below (up to 9.5× in technology / SaaS), already including a downward adjustment of -0.5 for their smaller size compared with medium-sized companies.
SDE × Multiple method
SDE (seller's discretionary earnings) is used when the owner is a key part of the business. It includes net profit plus the owner's salary and discretionary expenses. SDE multiples for this turnover range are usually between 1.0× and 4.5×.
To find out which range your business falls into, you can use our free valuation tool, which applies the multiples of Alcara Partners' valuation model by sector and size.
What are the multiples by sector?
Multiples vary significantly by sector. Below is an indicative estimate based on Alcara Partners' valuation model for businesses with a turnover of €500,000 to €1,500,000 in Spain:
EBITDA multiples by sector
| Sector | Multiple EBITDA |
|---|---|
| Technology / SaaS | 4.5× – 9.5× |
| Technical services (HVAC, electrical, plumbing) | 3× – 5.5× |
| Professional services (consulting, engineering) | 3× – 6× |
| Manufacturing / industry | 3× – 6× |
| Distribution and logistics | 3× – 5.5× |
| Hospitality and restaurants | 2.5× – 4.5× |
| Retail | 2.5× – 4.5× |
| Agri-food | 2.5× – 5× |
SDE multiples by sector
| Sector | Multiple SDE |
|---|---|
| Technology / SaaS | 2.5× – 4.5× |
| Technical services | 2× – 3.5× |
| Professional services | 2× – 3.5× |
| Manufacturing / industry | 2× – 3.5× |
| Distribution and logistics | 2× – 3.2× |
| Hospitality and restaurants | 1× – 2.5× |
| Retail | 1.5× – 2.5× |
| Agri-food | 1.5× – 3× |
Important note: The EBITDA multiples in the table include a downward adjustment of -0.5 compared with the base multiples (turnover of €1.5M-€3M), because smaller businesses are perceived as higher risk and less liquid. The SDE multiples carry no size adjustment.
Illustrative valuation examples
Let us look at three illustrative examples of businesses with a turnover of around €1 million in the Valencian Community (Comunidad Valenciana):
Illustrative example 1: Technical services business (HVAC)
- Turnover: €1,050,000
- Normalised EBITDA: €150,000
- Multiple applied: 3.0× – 5.5×
- Estimated value: €450,000 – €825,000
This business has recurring maintenance contracts (60% of revenue), a team of 8 technicians and low dependence on the owner. The positive factors (recurring revenue, a stable team) place it in the upper half of the range.
Illustrative example 2: Restaurant with a terrace in a tourist area of Alicante
- Turnover: €950,000
- SDE: €120,000
- Multiple applied: 1.0× – 2.5×
- Estimated value: €120,000 – €300,000
The owner works full time in the business, seasonality is high and the premises are rented. These factors push the multiple down, although the prime location adds a premium.
Illustrative example 3: Software development company
- Turnover: €1,100,000
- Normalised EBITDA: €250,000
- Multiple applied: 4.5× – 9.5×
- Estimated value: €1,125,000 – €2,375,000
With 80% recurring revenue from subscriptions, an autonomous technical team and growth of 15% a year, this company is valued well above one million euros despite a turnover similar to the previous ones.
How much is a business with €2 million turnover worth?
Going from €1 million to €2 million turnover does not double the value — it usually more than doubles it. Businesses with €2 million turnover qualify for higher multiples because:
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- They attract a wider pool of buyers (including investment groups).
- They have greater borrowing capacity to finance the acquisition.
Illustrative example: a business with €2 million turnover and an EBITDA of 15% (€300,000) could be valued at between €1,050,000 and €1,800,000 by applying multiples of 3.5× to 6.0×.
Which factors move the value within the range?
Within each sector and range of multiples, there are qualitative factors that determine whether your business sits at the upper or lower end:
Factors that increase value (upper end of the range)
- Recurring revenue: Maintenance contracts, subscriptions, multi-year agreements.
- Low dependence on the owner: The business runs without you. A buyer can take over without disruption.
- Customer diversification: No customer accounts for a disproportionate share of turnover.
- Sustained growth: A positive trend over the last 3 years.
- Documented processes: Operating manuals, standardised procedures.
- Stable team: Low staff turnover and capable middle managers.
Factors that reduce value (lower end of the range)
- High dependence on the owner: It can reduce the value significantly.
- Customer concentration: A single customer accounts for a large share of revenue.
- Extreme seasonality: Revenue concentrated in a few months of the year.
- Obsolete equipment or pending investment: The buyer deducts the capex needed.
- Litigation or tax contingencies: They create uncertainty and reduce the price or require amounts to be withheld.
How can I increase the value of my business before selling?
If you are able to plan the sale 12-24 months in advance, there are concrete actions that can move your business towards the upper end of the valuation range:
- Reduce your dependence: Delegate, hire middle managers, document processes. This step alone can increase the value significantly.
- Increase recurring revenue: Turn one-off projects into maintenance contracts or subscriptions.
- Diversify customers: Reduce concentration. If one customer weighs too heavily in your turnover, work actively on winning others.
- Clean up the accounts: Remove personal expenses, regularise any tax situation, present clear, auditable accounts.
- Improve margins: It is not just about selling more, but about earning more from every euro of turnover.
To find out where you stand today and how much you could improve, start with a free valuation.
What role does location in the Valencian Community play?
Location within the Valencian Community influences value in several ways. In Alcara Partners' valuation model, businesses located in Valencia or Alicante receive a small positive adjustment. Businesses in inland districts (comarcas) can compensate with higher margins (lower premises and staff costs) but usually take longer to find a buyer.
The industrial fabric of the Valencian Community — ceramics in Castellón, footwear in Elche, agri-food in La Ribera — also creates specific sector opportunities where multiples can be higher because of the interest of strategic buyers from the same sector.
If you want to go deeper into the complete sale process, see our guide on how to sell a business in the Valencian Community or read more about how much your business is worth.
Frequently asked questions
How much is a business with €1 million turnover worth?
Value depends on profit, not turnover. Its value is obtained by applying a multiple to its EBITDA or SDE, so two businesses with €1 million turnover can be worth very different amounts. Multiples vary by sector: technology and technical services tend towards the upper end, hospitality and retail towards the lower end.
Which multiple is applied to a small business?
For businesses with a turnover between €500,000 and €1,500,000, typical EBITDA multiples range between 2.5× and 6.0× in most sectors (up to 9.5× in technology / SaaS), already including a downward adjustment of -0.5 compared with medium-sized companies. SDE multiples are between 1.0× and 4.5×.
Does higher turnover always mean a higher value?
Not necessarily. A business with €1 million turnover and a 20% EBITDA margin is worth more than one with €2 million turnover and a 5% margin. What matters is normalised profit and how sustainable it is.
How do I calculate my business's EBITDA?
EBITDA = Net profit + Interest + Taxes + Depreciation + Amortisation. For valuation purposes, normalised EBITDA is used, which adjusts for extraordinary items and non-recurring expenses. Our free valuation tool helps you estimate it.
Is it better to use EBITDA or SDE to value my business?
If you are an owner-manager and your salary is a significant part of the costs, SDE is usually more representative. If the business has professional management that is independent of the owner, EBITDA is the more suitable metric.
Are multiples the same throughout Spain?
The base multiples are similar, but there are regional variations. Businesses in large cities (Madrid, Barcelona, Valencia) can benefit from slightly higher multiples because there are more buyers. Differences between sectors are more significant than geographical ones.
How much is a business with €2 million turnover worth?
A business with €2 million turnover and an EBITDA of 15% (€300,000) could be valued at between €1,050,000 and €1,800,000. The jump in value is more than proportional to the jump in turnover, because larger businesses qualify for higher multiples.
Can I increase the value of my business in 12 months?
Yes. The most effective levers are reducing dependence on the owner, increasing recurring revenue and diversifying the customer base. With 12-18 months of preparation, a business can improve its position significantly.